EXHIBIT (C)(1)
AGREEMENT AND PLAN OF MERGER
DATED AS OF JUNE 12, 1998
AMONG
TRIANGLE PACIFIC CORP.,
▇▇▇▇▇▇▇▇▇ WORLD INDUSTRIES, INC.
AND
SAPLING ACQUISITION, INC.
LIST OF EXHIBITS
Schedule Title
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1.2(a) Officers and Directors Tendering
5.5(a) Employment Agreements
5.5(b) Severance Plans
5.5(c) Employee Benefit Plans
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Table of Defined Terms
Definition Location of Definition
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Acquisition Proposal...........................................Section 5.4
Additional Conditions.......................................Section 1.1(a)
Agreement.........................................................Preamble
Bank Warrants...............................................Section 2.5(b)
Blue Sky Laws............................................Section 3.1(c)(v)
Board of Directors.........................................Section 8.13(b)
Business Day...............................................Section 8.13(c)
Certificate.................................................Section 2.2(b)
Certificate of Merger..........................................Section 1.6
Certificates................................................Section 2.2(b)
Closing........................................................Section 1.5
Closing Date...................................................Section 1.5
Company...........................................................Preamble
Company Benefit Plans....................................Section 3.1(b)(i)
Company Board Approval......................................Section 3.1(f)
Company Common Stock........................................Section 1.1(a)
Company Designees..............................................Section 1.3
Company Disclosure Schedule....................................Section 3.1
Company Material Adverse Effect.............................Section 3.1(a)
Company SEC Reports.........................................Section 3.1(d)
Company Stockholders Meeting................................Section 5.1(a)
Company Stock Options..........................................Section 2.4
Company Termination Fee.....................................Section 7.2(b)
Company Voting Debt.....................................Section 3.1(b)(ii)
Confidentiality Agreement...................................Section 5.2(b)
Credit Agreement..............................................Section 5.10
dated hereof...............................................Section 8.13(a)
D&O Insurance...............................................Section 5.7(b)
DGCL...........................................................Section 1.2
Dissenting Shares..............................................Section 2.3
DOJ.........................................................Section 5.3(b)
Effective Time.................................................Section 1.6
Employment Agreements.......................................Section 5.5(a)
ERISA....................................................Section 3.1(b)(i)
ESJ Warrants................................................Section 2.5(a)
Exchange Act................................................Section 1.1(a)
Expenses.......................................................Section 5.6
Extension Date..............................................Section 1.1(a)
Financial Advisor...........................................Section 3.1(h)
GAAP........................................................Section 3.1(d)
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Governmental Entity....................................Section 3.1(c)(iii)
HSR Act..................................................Section 3.1(c)(v)
Indebtedness...............................................Section 8.13(d)
Indemnified Party...........................................Section 5.7(a)
Indenture......................................................Section 5.9
Lien...................................................Section 3.1(b)(iii)
Merger............................................................Recitals
Merger Consideration........................................Section 2.1(c)
Merger Sub........................................................Preamble
Merger Sub Common Stock........................................Section 2.1
Minimum Condition...........................................Section 1.1(a)
Offer.......................................................Section 1.1(a)
Offer Documents.............................................Section 1.1(b)
Offer Price.................................................Section 1.1(a)
Offer to Purchase...........................................Section 1.1(a)
Options..................................................Section 3.1(b)(i)
Parent............................................................Preamble
Parent Disclosure Schedule.....................................Section 3.2
Parent Material Adverse Effect..............................Section 3.2(a)
Paying Agent................................................Section 2.2(a)
Permitted Lien.............................................Section 8.13(g)
Person.....................................................Section 8.13(f)
Preferred Stock.........................................Section 3.1.(b)(i)
Proxy Statement.............................................Section 5.1(b)
Regulatory Law..............................................Section 5.3(b)
Required Company Vote.......................................Section 3.l(g)
Required Consents........................................Section 3.1(c)(v)
Schedule 14D-1..............................................Section 1.1(b)
Schedule 14D-9..............................................Section 1.2(b)
SEC.........................................................Section 1.1(a)
Securities Act...........................................Section 3.1(c)(v)
Share.......................................................Section 1.1(a)
Shares......................................................Section 1.1(a)
Senior Notes...................................................Section 5.9
Stock Tender Agreement.....................................Section 8.13(h)
Subsidiary.................................................Section 8.13(j)
Superior Proposal..............................................Section 5.4
Surviving Corporation..........................................Section 1.4
the other party............................................Section 8.13(e)
Transactions................................................Section 1.2(a)
Trustee........................................................Section 5.9
Violation...............................................Section 3.1(c)(ii)
Warrants....................................................Section 2.5(b)
Warrant Consideration.......................................Section 2.5(c)
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of June 12, 1998 (this
"AGREEMENT"), among TRIANGLE PACIFIC CORP., a Delaware corporation (the
"COMPANY"), ▇▇▇▇▇▇▇▇▇ WORLD INDUSTRIES, INC., a Pennsylvania corporation
("PARENT"), and SAPLING ACQUISITION, INC., a Delaware corporation and a direct
wholly owned subsidiary of Parent ("MERGER SUB").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of the Company, Parent and
Merger Sub have each approved, and deem it advisable and in the best interests
of their respective stockholders to consummate, the acquisition of the Company
by Parent and Merger Sub pursuant to the Offer (as defined herein) and the
merger of Merger Sub with and into the Company (the "MERGER") upon the terms and
subject to the conditions set forth herein; and
WHEREAS, the Company, Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with the
transactions contemplated hereby and also to prescribe various conditions to the
transactions contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
THE OFFER AND MERGER
1.1 THE OFFER. (a) Provided that this Agreement shall not have been
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terminated in accordance with Section 7.1 and none of the events set forth in
Annex A hereto (other than the events set forth in clause (g) thereof) shall
have occurred or be continuing, as promptly as practicable (but in no event
later than five business days from the public announcement of the execution
hereof), Merger Sub shall commence (within the meaning of Rule 14d-2 under the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")) an offer (the
"OFFER") to purchase for cash all of the issued and outstanding shares of Common
Stock, par value $.01 per share (each a "SHARE" and, collectively, the "SHARES"
or the "COMPANY COMMON STOCK"), of the Company, at a price of $55.50 per Share,
net to the seller in cash (such price, or such higher price per Share as may be
paid in the Offer, the "OFFER PRICE"). Merger Sub shall, on the terms and
subject only to the prior satisfaction or waiver of the conditions of the Offer
set forth in Annex A hereto (except that the Minimum Condition (as defined
herein) may not be waived by Parent or Merger Sub without the consent of the
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Company), accept for payment and pay for Shares tendered as soon as it is
legally permitted to do so under applicable law. The obligations of Merger Sub
to accept for payment and to pay for any and all Shares validly tendered on or
before the expiration of the Offer and not withdrawn shall be subject only to
(i) there being validly tendered and not withdrawn before the expiration of the
Offer, that number of Shares which, together with any Shares beneficially owned
by Parent or Merger Sub, represent at least a majority of the Shares outstanding
on a fully diluted basis (the "MINIMUM CONDITION") and (ii) the other conditions
set forth in Annex A hereto (the "ADDITIONAL CONDITIONS" and, together with the
Minimum Condition, the "OFFER CONDITIONS"). The Offer shall be made by means of
an offer to purchase (the "OFFER TO PURCHASE") containing the terms set forth in
this Agreement and the Offer Conditions. Merger Sub shall not amend or waive
the Minimum Condition and shall not decrease the Offer Price or decrease the
number of Shares sought, or amend any other term or condition of the Offer in
any manner adverse to the holders of the Shares or, except as provided in the
next two sentences, extend the expiration date of the Offer without the prior
written consent of the Company. Notwithstanding the foregoing, Merger Sub may,
without the consent of the Company, (i) extend the Offer on one or more
occasions for an aggregate period of not more than 20 days, if at the scheduled
or extended expiration date of the Offer, the Minimum Condition shall not be
satisfied, (ii) extend the Offer from time to time until the earlier to occur of
(x) the satisfaction or waiver of all Offer Conditions or (y) August 31, 1998;
provided, however, that notwithstanding the foregoing, if all Offer Conditions
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other than the HSR Condition (as defined in Annex A hereto) have been satisfied
or waived, Merger Sub may, if such HSR Condition is reasonably capable of being
satisfied, extend the Offer without the consent of the Company until October 31,
1998 (either such date, as applicable, being the "EXTENSION DATE"), if at the
scheduled or extended expiration date of the Offer any of the Offer Conditions
(other than the Minimum Condition) which are reasonably capable of being
satisfied shall not be satisfied or waived, (iii) extend the Offer for any
period required by any rule, regulation, interpretation or position of the
United States Securities and Exchange Commission (the "SEC") or the staff
thereof applicable to the Offer and (iv) extend the Offer on one or more
occasions for an aggregate period of not more than 10 Business Days beyond the
latest expiration date that would otherwise be permitted under clause (i), (ii)
or (iii) of this sentence, if on such expiration date there shall not have been
tendered at least 90% of the outstanding Shares on a fully diluted basis;
provided, however, that if the Offer is extended pursuant to this clause (iv)
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hereof, the conditions to the Offer set forth in clauses (b), (f) or (h) of
Annex A hereto shall be deemed satisfied at all times thereafter.
Notwithstanding the foregoing, if requested by the Company, Merger Sub shall,
and Parent agrees to cause Merger Sub to, extend the Offer from time to time
until the earlier to occur of (x) the satisfaction or waiver of all Offer
Conditions or (y) the Extension Date if, and to the extent that, at the initial
expiration date of the Offer, or any extension thereof, all Offer Conditions
have not been satisfied or waived and all such conditions are reasonably capable
of being satisfied. In addition, the Offer Price may be increased and the Offer
may be extended to the extent required by law in connection with such increase,
in each case without the consent of the Company.
(b) As soon as practicable on the date the Offer is commenced, Parent
and Merger Sub shall file with the SEC a Tender Offer Statement on Schedule 14D-
1 with respect to the Offer (together with all amendments and supplements
thereto and including the
2
exhibits thereto, the "SCHEDULE 14D-1"). The Schedule 14D-1 will include, as
exhibits, the Offer to Purchase and a form of letter of transmittal and summary
advertisement (collectively, together with any amendments and supplements
thereto, the "OFFER DOCUMENTS"). The Offer Documents will comply in all
material respects with the provisions of applicable federal securities laws and,
on the date filed with the SEC and on the date first published, sent or given to
the Company's stockholders, shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that no representation is
made by Parent or Merger Sub with respect to information supplied by the Company
or any of its stockholders in writing for inclusion or incorporation by
reference in the Offer Documents. Each of Parent and Merger Sub further agrees
to take all steps necessary to cause the Offer Documents to be filed with the
SEC and to be disseminated to holders of Shares, in each case as and to the
extent required by applicable federal securities laws. Each of Parent and
Merger Sub, on the one hand, and the Company, on the other hand, agrees promptly
to correct any information provided by it for use in the Offer Documents if and
to the extent that it shall have become false or misleading in any material
respect, and Merger Sub further agrees to take all steps necessary to cause the
Offer Documents as so corrected to be filed with the SEC and to be disseminated
to holders of Shares, in each case as and to the extent required by applicable
federal securities laws. The Company and its counsel shall be given a
reasonable opportunity to review the initial Schedule 14D-1 before it is filed
with the SEC. In addition, Parent and Merger Sub agree to provide the Company
and its counsel in writing with any comments or other communications that
Parent, Merger Sub or their counsel may receive from time to time from the SEC
or its staff with respect to the Offer Documents promptly after the receipt of
such comments or other communications.
(c) Parent shall provide or cause to be provided to Merger Sub all of
the funds necessary to purchase any shares of Company Common Stock that Merger
Sub becomes obligated to purchase pursuant to the Offer.
(d) Upon the consummation of the Offer, Parent agrees to make a loan
to the Company, on commercially reasonable terms, in an amount sufficient for
the Company to make payments to holders of Company Stock Options as set forth in
Section 2.4 hereof, or, if such amount cannot be borrowed by the Company for any
reason, to contribute such amount to the Company.
1.2 COMPANY ACTIONS. (a) The Company hereby approves of and
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consents to the Offer and represents that the Board of Directors (as defined in
Section 8.13(b)), at a meeting duly called and held, has duly and unanimously
(i) approved this Agreement and the transactions contemplated hereby, including
the Offer and the Merger (as defined in the Recitals hereto) (collectively, the
"TRANSACTIONS") and (ii) determined, as of the date of such resolutions, that
the terms of the Offer and the Merger are fair to, and in the best interests of
the Company's stockholders, and resolved to recommend that the stockholders of
the Company accept the Offer, tender their Shares thereunder to Merger Sub and
approve and adopt this Agreement and the Merger (if required) and (iv) taken all
necessary steps to render Section 203 of the Delaware General Corporation Law
(the "DGCL") inapplicable to the Merger (it being understood that
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(x) nothing in this Agreement shall prevent or prohibit the Company from
complying with Rule 14d-9 and Rule 14(e)(2) under the Exchange Act with respect
to an Acquisition Proposal and (y) such recommendation may be withdrawn,
modified or amended as provided in Section 5.4 hereof). The Company has been
advised by each of its directors and executive officers listed on Schedule
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1.2(a) annexed hereto that each such person currently intends to tender all
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Shares beneficially owned by such person pursuant to the Offer.
(b) As promptly as practicable following the commencement of the Offer
and in all events not later than 10 business days following such commencement,
the Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with all amendments and supplements thereto and
including the exhibits thereto, the "SCHEDULE 14D-9") which shall, subject to
the provisions of this Agreement, contain the recommendation referred to in
clause (ii) of Section 1.2(a) hereof. The Schedule 14D-9 will comply in all
material respects with the provisions of applicable federal securities laws and,
on the date filed with the SEC and on the date first published, sent or given to
the Company's stockholders, shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that no representation is
made by the Company with respect to information supplied by Parent or Merger Sub
in writing for inclusion in the Schedule 14D-9. The Company further agrees to
take all steps necessary to amend or supplement the Schedule 14D-9 and to cause
the Schedule 14D-9 to be filed with the SEC and to be disseminated to holders of
Shares, in each case as and to the extent required by applicable federal
securities laws. Each of the Company, on the one hand, and Parent and Merger
Sub, on the other hand, agrees promptly to correct any information provided by
it for use in the Schedule 14D-9 if and to the extent that it shall have become
false or misleading in any material respect, and the Company further agrees to
take all steps necessary to cause the Schedule 14D-9 as corrected to be filed
with the SEC and to be disseminated to holders of the Shares, in each case as
and to the extent required by applicable federal securities laws. Parent and
its counsel shall be given a reasonable opportunity to review the initial
Schedule 14D-9 before it is filed with the SEC. In addition, the Company agrees
to provide Parent, Merger Sub and their counsel in writing with any comments or
other communications that the Company or its counsel may receive from time to
time from the SEC or its staff with respect to the Schedule 14D-9 promptly after
the receipt of such comments or other communications.
(c) In connection with the Offer and the Merger, the Company will
promptly furnish or cause to be furnished to Merger Sub mailing labels, security
position listings and any available listing or computer file containing the
names and addresses of the record holders of the Shares as of a recent date, and
shall furnish Merger Sub with such additional information (including updated
lists of holders of Shares and their addresses, mailing labels and lists of
security positions) and such other assistance as Merger Sub or its agents may
reasonably request in communicating the Offer to the record and beneficial
stockholders of the Company. Except for such steps as are necessary to
disseminate the Offer Documents and as required by applicable law, each of
Parent and Merger Sub shall hold in confidence the information contained in any
of such labels and lists and the additional information referred to in the
4
preceding sentence, will use such information only in connection with the Offer
and the Merger, and, if this Agreement is terminated, will upon request of the
Company deliver, and use its reasonable best efforts to cause its agents and
representatives to deliver to the Company all copies of such information then in
its possession or the possession of its agents or representatives.
1.3 DIRECTORS. (a) Promptly upon the purchase of and payment
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for Shares by Parent or any of its Subsidiaries (as defined in Section 8.13(j))
pursuant to the Offer, Parent shall be entitled to designate such number of
directors, rounded up to the next whole number, on the Board of Directors of the
Company as is equal to the product of the total number of directors on such
Board (giving effect to the directors designated by Parent pursuant to this
sentence) multiplied by the percentage that the aggregate number of Shares
beneficially owned by Merger Sub, Parent and any of their affiliates bears to
the total number of shares of Company Common Stock then outstanding. The
Company shall, upon request of Merger Sub take any and all actions within the
Company's power which are necessary to cause Parent's designees to be appointed
to the Board of Directors (including by increasing the size of the Board of
Directors or using its best efforts to cause incumbent directors to resign). At
such time, the Company shall use its best efforts to cause persons designated by
Parent to constitute the same percentage of each committee of the Board of
Directors, each board of directors of each Subsidiary and each committee of each
such board as such persons represent on the Board of Directors. Notwithstanding
the foregoing, until the Effective Time (as defined in Section 1.6 hereof), the
Company shall retain as members of its Board of Directors at least two directors
who are directors of the Company on the date hereof (the "COMPANY DESIGNEES").
The Company's obligations under this Section 1.3(a) shall be subject to Section
14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. The Company
shall promptly take all actions required pursuant to such Section 14(f) and Rule
14f-1 in order to fulfill its obligations under this Section 1.3(a), including
mailing to stockholders the information required to by such Section 14(f) and
Rule 14f-1 as is necessary to enable Parent's designees to be elected to the
Company's Board of Directors. Parent or Merger Sub will supply the Company any
information with respect to either of them and their nominees, officers,
directors and affiliates required by such Section 14(f) and Rule 14f-1.
(b) From and after the time, if any, that Parent's designees
constitute a majority of the Board of Directors and until the Effective Time any
amendment of this Agreement, any termination of this Agreement by the Company,
any extension of time for performance of any of the obligations of Parent of
Merger Sub hereunder, any waiver of any condition or any of the Company's rights
hereunder or other action by the Company hereunder may be effected only by the
action of a majority of the directors of the Company then in office who are
Company Designees, which action shall be deemed to constitute the action of the
full Board of Directors; provided, that if there shall be no such directors
(other than in breach hereof), such actions may be effected by unanimous vote of
the entire Board of Directors of the Company.
1.4 THE MERGER. Upon the terms and subject to the conditions set
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forth in this Agreement, and in accordance with the Delaware General Corporation
Law (the "DGCL"),
5
Merger Sub shall be merged with and into the Company at the Effective Time.
Following the Merger, the separate corporate existence of Merger Sub shall
cease, and the Company shall continue as the surviving corporation (the
"SURVIVING CORPORATION") under the name "Triangle Pacific Corp."
1.5 CLOSING. The closing of the Merger (the "CLOSING") will take
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place on the fifth Business Day after the satisfaction or waiver (subject to
applicable law) of the conditions (excluding conditions that, by their terms,
cannot be satisfied until the Closing Date) set forth in Article VI (the
"CLOSING DATE"), unless another time or date is agreed to in writing by the
parties hereto. The Closing shall be held at the offices of O'Melveny & ▇▇▇▇▇
LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, unless another place is agreed to
in writing by the parties hereto.
1.6 EFFECTIVE TIME. As soon as practicable following the Closing,
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the parties shall (i) file a certificate of merger (the "CERTIFICATE OF MERGER")
in such form as is required by and executed in accordance with the relevant
provisions of the DGCL and (ii) make all other filings or recordings required
under the DGCL. The Merger shall become effective at such time as the
Certificate of Merger is duly filed with the Delaware Secretary of State or at
such subsequent time as the Company and Parent shall agree and be specified in
the Certificate of Merger (the date and time the Merger becomes effective being
the "EFFECTIVE TIME").
1.7 EFFECTS OF THE MERGER. At and after the Effective Time, the
---------------------
Merger will have the effects set forth in the DGCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time all the
property, rights, privileges, powers and franchises of the Company and Merger
Sub shall be vested in the Surviving Corporation, and all debts, liabilities and
duties of the Company and Merger Sub shall become the debts, liabilities and
duties of the Surviving Corporation.
1.8 CERTIFICATE OF INCORPORATION. The certificate of incorporation
----------------------------
of the Company, as in effect immediately before the Effective Time, shall be the
certificate of incorporation of the Surviving Corporation, until thereafter
changed or amended as provided therein or by applicable law.
1.9 BYLAWS. The bylaws of the Company as in effect at the Effective
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Time shall be the bylaws of the Surviving Corporation until thereafter changed
or amended as provided therein or by applicable law.
1.10 OFFICERS AND DIRECTORS OF SURVIVING CORPORATION. The officers of
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the Company as of the Effective Time shall be the officers of the Surviving
Corporation, until the earlier of their resignation or removal or otherwise
ceasing to be an officer or until their respective successors are duly elected
and qualified, as the case may be. The directors of Merger Sub as of the
Effective Time shall be the directors of the Surviving Corporation until the
earlier of their resignation or removal or otherwise ceasing to be a director or
until their respective successors are duly elected and qualified.
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1.11 VOTE TO APPROVE MERGER. Parent agrees that it will vote, or
----------------------
cause to be voted, all of the Shares then owned by it, Merger Sub or any of its
other Subsidiaries and affiliates in favor of the approval of the Merger and the
adoption of this Agreement.
1.12 MERGER WITHOUT MEETING OF STOCKHOLDERS. If permitted by the
--------------------------------------
DGCL, in the event that Parent, Merger Sub or any other Subsidiary of Parent
shall acquire at least 90% of the outstanding shares of each class of capital
stock of the Company, pursuant to the Offer or otherwise, the parties hereto
agree to take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after such acquisition, without a meeting of
stockholders of the Company.
ARTICLE II
CONVERSION OF SECURITIES
2.1 CONVERSION OF CAPITAL STOCK. As of the Effective Time, by virtue
---------------------------
of the Merger and without any action on the part of the holders of any shares of
Company Common Stock or common stock of Merger Sub (the "MERGER SUB COMMON
STOCK"):
(a) Merger Sub Common Stock. Each issued and outstanding share of
-----------------------
Merger Sub Common Stock shall be converted into and become one fully paid and
nonassessable share of common stock, par value $.01 per share, of the Surviving
Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. Each share
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of Company Common Stock owned by the Company or any Subsidiary of the Company
and each share of Company Common Stock owned by Parent, Merger Sub or any other
wholly owned Subsidiary of Parent shall be cancelled and retired and shall cease
to exist and no consideration shall be delivered in exchange therefor.
(c) Exchange of Shares. Each issued and outstanding share of Company
------------------
Common Stock (other than Shares to be cancelled in accordance with Section
2.1(b) hereof and any Dissenting Shares (as defined in Section 2.3 hereof, if
applicable)), shall be converted into the right to receive the Offer Price,
payable to the holder thereof, without interest (the "MERGER CONSIDERATION"),
upon surrender of the certificate formerly representing such share of Company
Common Stock in the manner provided in Section 2.2 hereof. All such shares of
Company Common Stock, when so converted, shall no longer be outstanding and
shall automatically be cancelled and retired and shall cease to exist, and each
holder of a certificate representing any such shares shall cease to have any
rights with respect thereto, except the right to receive the Merger
Consideration therefor upon the surrender of such certificate in accordance with
Section 2.2 hereof, without interest, or to perfect any rights of appraisal as a
holder of Dissenting Shares that such holder may have pursuant to Section 262 of
the DGCL.
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2.2 EXCHANGE OF CERTIFICATES.
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(a) Paying Agent. Parent shall designate a bank or trust company
------------
reasonably acceptable to the Company to act as agent in order for the holders of
shares of Company Common Stock and the holders of Warrants in connection with
the Merger (the "PAYING AGENT") to receive the funds to which all such holders
shall become entitled pursuant to Section 2.1(c) or 2.5 hereof. Before the
Effective Time, Parent shall deposit or cause to be deposited with the Paying
Agent such funds for timely payment hereunder. Such funds shall be invested by
the Paying Agent as directed by Parent or the Surviving Corporation.
(b) Exchange Procedures. Parent shall instruct the Paying Agent to,
-------------------
as soon as reasonably practicable after the Effective Time but in no event more
than three business days thereafter, mail to each holder of record of a
certificate, which immediately before the Effective Time represented outstanding
shares of Company Common Stock (a "CERTIFICATE," or, collectively, the
"CERTIFICATES"), whose shares were converted pursuant to Section 2.1 hereto into
the right to receive the Merger Consideration (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Paying
Agent and shall be in such form and have such other provisions as Parent may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for payment of the Merger Consideration. Upon
surrender of a Certificate for cancellation to the Paying Agent or to such other
agent or agents as may be appointed by Parent, together with such letter of
transmittal, duly executed, the holder of such Certificate shall be entitled to
receive in exchange therefor the Merger Consideration payable for each share of
Company Common Stock formerly represented by such Certificate and the
Certificate so surrendered shall forthwith be cancelled. If payment of the
Merger Consideration is to be made to a person other than the person in whose
name the surrendered Certificate is registered, it shall be a condition of
payment that the Certificate so surrendered shall be properly endorsed or shall
be otherwise in proper form for transfer and that the person requesting such
payment shall have paid any transfer and other taxes required by reason of the
payment of the Merger Consideration to a person other than the registered holder
of the Certificate surrendered or shall have established to the satisfaction of
the Surviving Corporation that such tax either has been paid or is not
applicable. Until surrendered as contemplated by this Section 2.2, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive the Merger Consideration in cash as contemplated by
this Section 2.2. No interest will be paid or accrue on the cash payable upon
the surrender of any Certificate.
(c) Transfer Books; No Further Ownership Rights in Company Common
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Stock. At the Effective Time, the stock transfer books of the Company shall be
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closed and thereafter there shall be no further registration of transfers of
shares of Company Common Stock on the records of the Company. From and after
the Effective Time, the holders of Certificates evidencing ownership of shares
of Company Common Stock outstanding immediately before the Effective Time shall
cease to have any rights with respect to such Shares, except as otherwise
provided for herein or by applicable law. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they
shall be cancelled and exchanged as provided in this Article II.
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(d) Termination of Fund; No Liability. At any time following one year
---------------------------------
after the Effective Time, the Surviving Corporation shall be entitled to require
the Paying Agent to deliver to it any funds (including any interest received
with respect thereto) which had been made available to the Paying Agent and
which have not been disbursed to holders of Certificates, and thereafter such
holders shall be entitled to look to the Surviving Corporation (subject to
abandoned property, escheat or other similar laws) only as general creditors
thereof with respect to the Merger Consideration payable upon due surrender of
their Certificates, without any interest thereon. Notwithstanding the
foregoing, neither the Surviving Corporation nor the Paying Agent shall be
liable to any holder of a Certificate for Merger Consideration delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
2.3 DISSENTING SHARES. Notwithstanding anything in this Agreement to
-----------------
the contrary, Shares outstanding immediately before the Effective Time and held
by a holder who has not voted in favor of the Merger or consented thereto in
writing and who has demanded appraisal for such Shares in accordance with the
DGCL ("DISSENTING SHARES") shall not be converted into a right to receive the
Merger Consideration, unless such holder fails to perfect or withdraws or
otherwise loses his or her right to appraisal. A holder of Dissenting Shares
shall be entitled to receive payment of the appraised value of such Shares held
by him or her in accordance with the provisions of Section 262 of the DGCL,
unless, after the Effective Time, such holder fails to perfect or withdraws or
loses his or her right to appraisal, in which case such Shares shall be treated
as if they had been converted as of the Effective Time into a right to receive
the Merger Consideration, without interest thereon. The Company shall give
Parent (i) prompt notice of any demands for appraisal of Shares received by the
Company and (ii) the opportunity to participate in and direct all negotiations
and proceedings with respect to any such demands. The Company shall not,
without the prior written consent of Parent, make any payment with respect to,
or settle, offer to settle or otherwise negotiate, any such demands.
2.4 COMPANY OPTION PLANS.
--------------------
(a) All outstanding options to purchase Company Common Stock held by
all current and former employees and directors of the Company ("COMPANY STOCK
OPTIONS") granted to such employees and directors under any Company Benefit Plan
(as defined in Section 3.1(b)(i)), whether or not then exercisable, shall be
made fully vested and exercisable and canceled by the Company immediately before
the earlier of (x) the consummation of the Offer or (y) the Effective Time, and
thereafter, the holders' sole right shall be to, and the holders thereof shall,
receive from the Company, for each Share subject to such Company Stock Option,
an amount in cash equal to the difference between the Offer Price and the
exercise price per share of such Company Stock Option, which amount shall be
paid by the Company at the time such Company Stock Option is canceled. The
Company will use its best efforts to obtain any necessary consents and make any
amendments to the terms of the Company Benefit Plans to the extent such consents
or amendments are necessary to give effect to the foregoing. All applicable
withholding taxes attributable to the payments made hereunder shall be deducted
from the amounts payable under this Section 2.4.
9
(b) Prior to the Effective Time, the Company's employee stock benefit
plans shall be terminated and the provisions in any other Company Benefit Plan
providing for the issuance or grant of any other interest in respect of the
capital stock of the Company or any Subsidiary shall be deleted. The Company
shall take all actions necessary to ensure that following the Effective Time no
holder of a Company Stock Option or any participant in any Company Benefit Plan
shall have the right thereunder to acquire any capital stock of the Company,
Parent, the Surviving Corporation or any of their respective Subsidiaries,
except as provided in this Section 2.4.
2.5 WARRANTS.
--------
(a) In accordance with the terms of the ESJ Exchange Agreement dated
as of June 5, 1992 among the ESJ Entities, TPC Holding Corp. and the Company and
the warrant certificates issued thereunder (the "Warrant Certificates"), all
outstanding warrants of the Company issued pursuant thereto (the "ESJ WARRANTS")
(other than ESJ Warrants owned by Parent, Merger Sub or any other direct or
indirect subsidiary of Parent, which ESJ Warrants shall be canceled and
extinguished at the Effective Time, with no payment being made with respect to
such ESJ Warrants) shall, following the Effective Time, be exercisable only for
an amount of cash equal to the Offer Price and the holders of such ESJ Warrants
shall be entitled to receive, upon surrender to the Paying Agent of the warrant
certificates for cancellation, cash in an amount equal to the Warrant
Consideration. The Company shall take all actions necessary to ensure that
following the Effective Time (i) the ESJ Warrants shall represent only the right
to receive the Warrant Consideration in lieu of Shares issuable upon exercise
thereof, (ii) all warrant agreements shall be terminated and cancelled and
(iii) no party to such warrant agreements shall have the right to acquire any
capital stock of the Company, Parent, the Surviving Corporation or any of their
respective subsidiaries.
(b) In accordance with the terms of the Lenders' Equity Agreement
dated as of June 5, 1992 between the Company and certain banks and other
financial institutions (the "Banks"), the Banks hold certain rights (the "BANK
WARRANTS" and, collectively with the ESJ Warrants, the "WARRANTS") entitling
them to receive an aggregate of 4,858 Shares (upon payment of $.01 per Share)
upon the exercise of the ESJ Warrants by the holders thereof. The Company
agrees to use its best efforts to (i) obtain, prior to the Effective Time,
consents or waivers from each Bank whereby such Bank agrees to receive the
Warrant Consideration in lieu of Shares issuable upon the exercise of the Bank
Warrants and (ii) ensure that following the Effective Times (x) the Bank
Warrants shall represent only the right to receive cash in an amount equal to
the per share Offer Price less $.01 per share, (y) the Lenders' Equity Agreement
shall be terminated and cancelled and (z) no party to such Lenders' Equity
Agreement shall have the right to acquire any capital stock of the Company,
Parent, the Surviving Corporation or any of their respective Subsidiaries..
(c) As used herein "WARRANT CONSIDERATION" shall mean an amount per
Warrant equal to the product of (i) the number of Shares issuable upon exercise
of such Warrant and (ii) the difference between the Offer Price and the per
Share exercise price per Warrant, without interest, which amount shall be paid
from and after the Effective Time.
10
2.6 LOST CERTIFICATES. If any Certificate or Warrant Certificate
-----------------
shall have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the Person claiming such Certificate or Warrant Certificate to be
lost, stolen or destroyed and, if required by the Surviving Corporation, the
posting by such Person of a bond in such reasonable amount as the Surviving
Corporation may direct as indemnity against any claim that may be made against
it with respect to such Certificate or Warrant Certificate, the Paying Agent
will deliver in exchange for such lost, stolen or destroyed Certificate or
Warrant Certificate the applicable Merger Consideration or Warrant
Consideration, as the case may be, with respect to the shares of Company Common
Stock or Warrants formerly represented thereby.
2.7 WITHHOLDING RIGHTS. Each of the Surviving Corporation and Parent
------------------
shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of shares of Company Common
Stock or Warrants such amounts as it is required to deduct and withhold with
respect to the making of such payment under the Internal Revenue Code of 1986,
as amended, and the regulations promulgated thereunder and the rules and
regulations promulgated thereunder, or any provision of state, local or foreign
tax law. To the extent that amounts are so withheld by the Surviving Corporation
or Parent, as the case may be, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the shares of
Company Common Stock or Warrants in respect of which such deduction and
withholding was made by the Surviving Corporation or Parent, as the case may be.
2.8 FURTHER ASSURANCES. At and after the Effective Time, the
------------------
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Merger Sub, any
deeds, bills of sale, assignments or assurances and to take and do, in the name
and on behalf of the Company or Merger Sub, any other actions and things to
vest, perfect or confirm of record or otherwise in the Surviving Corporation any
and all right, title and interest in, to and under any of the rights, properties
or assets acquired or to be acquired by the Surviving Corporation as a result
of, or in connection with, the Merger.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as set
---------------------------------------------
forth in the Company SEC Reports (as defined in Section 3.1(d)) filed prior to
the date hereof or in the Company Disclosure Schedule delivered by the Company
to Parent before the execution of this Agreement (the "COMPANY DISCLOSURE
SCHEDULE"), the Company represents and warrants to Parent and Merger Sub as
follows:
(a) Organization, Standing and Power. Each of the Company and its
--------------------------------
Subsidiaries (1) is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, (2) has all necessary power
and authority required to own, lease, license or use its assets and properties
now owned, leased, licensed or used and to carry on its
11
business as now conducted and (3) is duly qualified as a foreign corporation,
limited liability company or limited partnership, as the case may be, under the
laws of each jurisdiction in which qualification is required either to own,
lease, license or use its properties now owned, leased, licensed and used or to
carry on its business as now conducted, except where the failure to effect or
obtain such qualification, individually or in the aggregate, would not
constitute a Company Material Adverse Effect. "COMPANY MATERIAL ADVERSE EFFECT"
means, with respect to the Company, any adverse change, circumstance or effect
that is reasonably likely to be materially adverse to the business, financial
condition or results of operations of the Company and its Subsidiaries taken as
a whole or on transactions contemplated hereby, other than any change,
circumstance or effect (i) relating to the economy or securities markets in
general, (ii) relating to the industries in which the Company operates and not
specifically relating to the Company or (iii) resulting from the execution of
this Agreement, the announcement of this Agreement and the Transactions
contemplated hereby or any change in the value of the Company relating to such
execution or announcement. The copies of the certificate of incorporation and
bylaws of the Company, which were previously furnished to Parent, are complete
copies of such documents as in effect on the date of this Agreement.
(b) Capital Structure.
-----------------
(i) The authorized capital stock of the Company consists solely
of 30,000,000 shares of Company Common Stock and 10,000,000 shares of
preferred stock, par value $.01 per share (the "PREFERRED STOCK"). As of
June 9, 1998, 14,766,575 shares of Company Common Stock were issued and
outstanding, no shares of Preferred Stock were issued and outstanding, no
shares of capital stock were held in the treasury of the Company and
2,510,021 shares of Company Common Stock were reserved for issuance
pursuant to the Company Benefit Plans and Warrants of the Company. Since
such date, there have been no issuances of shares of the capital stock of
the Company or any other securities of the Company other than issuances of
shares pursuant to options or rights outstanding as of such date under the
Company Benefit Plans. All issued and outstanding shares of the capital
stock of the Company are and all shares reserved for issuance will be, when
issued in accordance with the terms specified in the commitments or
agreements pursuant to which they are issuable, duly authorized, validly
issued, fully paid and nonassessable, and no class of capital stock is
entitled to preemptive rights. As of June 9, 1998 except for (i) options
representing in the aggregate the right to purchase 1,375,414 shares of
Company Common Stock under the Company Benefit Plans and (ii) 809,014
Warrants validly issued and currently exercisable for 809,014 shares of
Company Common Stock in the aggregate, there were no, and at the Effective
Time (except pursuant to this Agreement) there will not be any, outstanding
securities, options, subscriptions, warrants, calls, rights (including
"phantom" stock rights), preemptive rights or other contracts, commitments,
understandings or arrangements, including any right of conversion or
exchange under any outstanding security, instrument or agreement (together,
"OPTIONS") obligating the Company or any of its Subsidiaries to issue,
deliver or sell or cause to be issued, delivered or sold any shares of
capital stock of the Company or to issue, grant, extend or enter into any
Option with respect thereto or to repurchase, redeem or otherwise acquire
any share of capital stock of the Company. The
12
Company is not a party to any voting agreement with respect to the voting
of any of its securities. "COMPANY BENEFIT PLANS" means each employee
benefit plan, program, arrangement and contract (including but not limited
to any "employee benefit plan," as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") , whether or
not subject to ERISA and any bonus, deferred compensation, incentive, stock
appreciation right, phantom stock, stock bonus, stock purchase, restricted
stock, stock option, employment, termination, stay agreement or bonus,
change in control, severance or other compensatory plan, program,
arrangement and contract) all of the foregoing in effect on the date of
this Agreement and, in the case of a Company Benefit Plan which is subject
to Part 3 of Title I of ERISA, Section 412 of the Code or Title IV of
ERISA, at any time during the five-year period preceding the date of this
Agreement, to which the Company is a party, which is maintained or
contributed to by the Company or a Subsidiary, or with respect to which the
Company could incur material liability or which otherwise benefits any
employees and directors of the Company or its Subsidiaries. No options or
warrants or other rights to acquire capital stock from the Company have
been issued or granted since June 9, 1998.
(ii) No bonds, debentures, notes or other indebtedness of the
Company having the right to vote (or convertible or exchangeable into or
exercisable for securities having the right to vote) on matters on which
stockholders of the Company or any of its Subsidiaries may vote ("COMPANY
VOTING DEBT") are authorized, issued or outstanding.
(iii) All of the outstanding shares of capital stock of each
Subsidiary of the Company are duly authorized, validly issued, fully paid
and nonassessable and are owned, beneficially and of record, by the Company
or a Subsidiary wholly-owned, directly or indirectly, by the Company, free
and clear of any liens, claims, mortgages, encumbrances, pledges, security
interests, equities and charges of any kind (each, a "LIEN"), other than
Permitted Liens described in clauses (i) and (ii) of the definition
thereof. Except for interests in its Subsidiaries, neither the Company nor
any of its Subsidiaries owns directly or indirectly any interest or
investment (whether equity or debt) in any corporation, partnership, joint
venture, limited liability company, trust or other entity. There are no
outstanding Options obligating the Company or any of its Subsidiaries to
issue, deliver or sell or cause to be issued, delivered or sold any shares
of capital stock of any Subsidiary of the Company or to issue, grant,
extend or enter into any Option with respect thereto, or to repurchase,
redeem or otherwise acquire any shares of capital stock of any Subsidiary
of the Company.
(c) Authority; No Conflicts.
-----------------------
(i) The Company has all requisite corporate power and authority
to enter into this Agreement and to consummate the Transactions
contemplated hereby, subject in the case of the consummation of the Merger
to the adoption of this Agreement by the Required Company Vote (as defined
in Section 3.1(g)), if required by law. The execution and delivery of this
Agreement and the consummation of the Transactions contemplated hereby have
been duly authorized by all necessary corporate action on the
13
part of the Company, subject in the case of the consummation of the Merger
to the adoption of this Agreement by the Required Company Vote. This
Agreement has been duly executed and delivered by the Company and
constitutes a valid and binding agreement of the Company, enforceable
against it in accordance with its terms, except as such enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium and
similar laws relating to or affecting creditors generally, by general
equity principles (regardless of whether such enforceability is considered
in a proceeding in equity or at law).
(ii) The execution and delivery of this Agreement does not and
the consummation of the Merger and the other Transactions contemplated
hereby will not conflict with, result in any violation of, constitute a
default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, amendment, cancellation or acceleration of
any obligation or the loss of a material benefit under, or the creation of
a Lien on any assets of the Company or any of its Subsidiaries (any such
conflict, violation, default, right of termination, amendment, cancellation
or acceleration, loss or creation, a "VIOLATION") pursuant to: (A) any
provision of the certificate of incorporation or bylaws of the Company or
any of its Subsidiaries, or (B) except as would not, individually or in the
aggregate, constitute a Company Material Adverse Effect and, subject to
obtaining or making the Required Consents (as defined in Section
3.1(c)(iv)), any loan or credit agreement, note, mortgage, bond, indenture,
lease, benefit plan or other agreement, obligation, instrument, permit,
franchise, license, judgment, order, decree, statute, law, ordinance, rule
or regulation applicable to the Company or any Subsidiary of the Company or
their respective properties or assets.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any national, state, municipal or
local government, any instrumentality, subdivision, court, administrative
agency or commission or other authority thereof, or any quasi-governmental
or private body exercising any regulatory, taxing, importing or other
governmental or quasi-governmental authority (a "GOVERNMENTAL ENTITY"), is
required by or with respect to the Company or any of its Subsidiaries in
connection with the execution and delivery of this Agreement by the Company
or the consummation of the Merger and the other Transactions contemplated
hereby, except for the Required Consents and such other consents,
approvals, orders, authorizations, registrations, declarations and filings
the failure of which to make or obtain would not, individually or in the
aggregate, constitute a Company Material Adverse Effect.
(iv) The Company and its Subsidiaries are not in violation of any
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Company or any Subsidiary of the Company or their
respective properties or assets except for violations which, individually
or in the aggregate, do not constitute a Company Material Adverse Effect.
14
(v) As used herein, "REQUIRED CONSENTS" shall mean consents,
approvals, orders, authorizations, registrations, declarations and filings
required under or in relation to (A) the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended (the "HSR ACT"), (B) state securities
or "blue sky" laws (the "BLUE SKY LAWS"), (C) the Securities Act of 1933,
as amended (the "SECURITIES ACT"), (D) the Exchange Act, (E) the filing of
the Certificate of Merger under the DGCL, (F) rules and regulations of
NASDAQ, (G) antitrust or other competition laws of other jurisdictions and
(H) consents set forth on the Company Disclosure Schedule.
(d) Reports and Financial Statements. The Company and each of its
--------------------------------
wholly owned Subsidiaries required to file reports under Sections 13 or 15(d) of
the Exchange Act has filed all required reports, schedules, forms, statements
and other documents required to be filed by it with the SEC since January 1,
1995 (collectively, including all exhibits thereto, and together with such other
reports, schedules, forms, statements and other documents, filed by the Company
or any Subsidiary with the SEC under the Exchange Act and the Securities Act,
including all exhibits thereto, the "COMPANY SEC REPORTS"). None of the Company
SEC Reports, as of their respective dates, contained or will contain any untrue
statement of a material fact or omitted or will omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. Each of
the financial statements (including the related notes) included in the Company
SEC Reports presents fairly, in all material respects, the consolidated
financial position and consolidated results of operations and cash flows of the
Company and its Subsidiaries as of the respective dates or for the respective
periods set forth therein, and were prepared in conformity with United States
generally accepted accounting principles ("GAAP") consistently applied during
the periods involved except as otherwise noted therein, and subject, in the case
of the unaudited interim financial statements, to normal and recurring year-end
adjustments that have not been and are not expected to be material in amount.
All of the Company SEC Reports, as of their respective dates (and as of the date
of any amendment to the respective Company SEC Report), complied as to form in
all material respects with the applicable requirements of the Securities Act and
the Exchange Act and the rules and regulations promulgated thereunder. Except
for matters reflected or reserved against in the balance sheet for the period
ended April 3, 1998 included in the financial statements contained in the
Company's most recent Form 10-Q, neither the Company nor any of its Subsidiaries
has incurred since that date any liabilities or obligations of any nature
(whether accrued, absolute, contingent, fixed or otherwise) which would be
required under GAAP to be set forth on a consolidated balance sheet of the
Company and its consolidated Subsidiaries, except liabilities and obligations
which were incurred in the ordinary course of business consistent with past
practice since such date.
(e) Information Supplied.
--------------------
(i) None of the information supplied or to be supplied by the
Company for inclusion or incorporation by reference in the Offer Documents,
the Schedule 14D-9 or the Proxy Statement, if required, including any
amendments or supplements thereto, will, at the respective times the Offer
Documents, the Schedule 14D-9 and the Proxy
15
Statement, as the case may be, are filed with the SEC or first published,
sent or given to the Company's stockholders or at the time of the Company
Stockholders Meeting contain any untrue statement of material fact, or omit
to state any material fact required to be stated therein or necessary in
order to make the statements therein in light of the circumstances under
which they are made not false or misleading. The Schedule 14D-9 and the
Proxy Statement, if required, will comply as to form in all material
respects with the requirements of the Exchange Act and the Securities Act
and the rules and regulations thereunder.
(ii) Notwithstanding the foregoing provisions of this Section
3.1(e), no representation or warranty is made by the Company with respect
to statements made or incorporated by reference in the Offer Documents, the
Schedule 14D-9 or, if required, the Proxy Statement based on information
supplied by Parent for inclusion or incorporation by reference therein.
(f) Board Approval. The Board of Directors of the Company, by
--------------
resolutions duly adopted at a meeting duly called and held and not subsequently
rescinded or modified (the "COMPANY BOARD APPROVAL"), has duly and unanimously
(i) determined that this Agreement and the terms of the Offer and the Merger are
fair to, in the best interests of the Company and its stockholders, (ii)
approved this Agreement, the Offer and the Merger, (iii) determined to recommend
that the stockholders of the Company accept the Offer, tender their Shares
thereunder to Merger Sub and approve and adopt this Agreement and the
Transactions, and (iv) approved the transactions contemplated by the Stock
Tender Agreement prior to the execution and delivery of such Stock Tender
Agreement and this Agreement. The Company Board Approval constitutes approval
by and on behalf of the Company of this Agreement and the Merger for purposes of
Section 251 of the DGCL and Section 203 of the DGCL and the provisions of
Section 203 of the DGCL will not, before the termination of this Agreement,
apply to this Agreement, the Offer, the Merger or the other transactions
contemplated hereby.
(g) Vote Required. The affirmative vote of the holders of a majority
-------------
of the outstanding shares of Company Common Stock, voting together as a single
class, to approve the Merger (the "REQUIRED COMPANY VOTE"), if required by
applicable law, is the only vote of the holders of any class or series of the
Company capital stock or Company Voting Debt necessary to adopt this Agreement
and approve the Transactions contemplated hereby.
(h) Brokers or Finders. No agent, broker, investment banker,
------------------
financial advisor or other firm or Person is or will be entitled to any broker's
or finder's fee or any other similar commission or fee in connection with any of
the Transactions contemplated by this Agreement, except ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
(the "FINANCIAL ADVISOR"), whose fees and expenses will be paid by the Company
in accordance with the Company's agreement with such firm, which has been
disclosed to Parent.
(i) Opinion of the Financial Advisor. The Company has received the
--------------------------------
opinion of the Financial Advisor, dated the date hereof, to the effect that, as
of such date, the Offer Price and the Merger Consideration is fair, from a
financial point of view, to the holders of
16
Company Common Stock, a true and complete copy of which has been delivered to
Parent prior to the execution of this Agreement.
(j) Absence of Certain Changes or Events. Except for the process
------------------------------------
culminating in the execution of this Agreement and as contemplated by this
Agreement, since January 2, 1998 (i) there has not been any change, event or
development constituting, individually or in the aggregate, a Company Material
Adverse Effect; (ii) the businesses of the Company and its Subsidiaries have
been conducted only in the ordinary course consistent with past practice; (iii)
the Company has not set aside or declared any dividend or other distribution
with respect to its capital stock; and (iv) the Company has not changed, in any
material way, its accounting principles, practices or methods.
(k) Title to Properties; Entire Business. The Company and its
------------------------------------
Subsidiaries have good title or a valid and subsisting leasehold interest in and
to or a valid and enforceable license to use all material assets, properties and
rights owned, used or held for use by them in the conduct of their respective
businesses, in each case, free and clear of any Liens other than Permitted
Liens. The Company and its Subsidiaries own or have sufficient right to use all
assets and properties necessary to conduct their businesses in the manner in
which they are currently conducted.
(l) Litigation. As of the date hereof, there is no suit, action or
----------
proceeding pending or, to the knowledge of the Company, threatened against the
Company or any of its Subsidiaries that, individually or in the aggregate,
constitutes a Company Material Adverse Effect.
3.2 REPRESENTATIONS AND WARRANTIES OF PARENT. Except as set forth in
----------------------------------------
the Parent Disclosure Schedule delivered by Parent to the Company before the
execution of this Agreement (the "PARENT DISCLOSURE SCHEDULE"), Parent
represents and warrants to the Company hereof as follows:
(a) Organization, Standing and Power. Each of Parent and its
--------------------------------
Subsidiaries (1) is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, (2) has all necessary power
and authority and all material licenses, authorizations, consents and approvals
required to own, lease, license or use its properties now owned, leased,
licensed or used and to carry on its business as now conducted and (3) is duly
qualified as a foreign corporation, limited liability company or limited
partnership, as the case may be, under the laws of each jurisdiction in which
qualification is required either to own, lease, license or use its properties
now owned, leased, licensed and used or to carry on its business as now
conducted, except where the failure to effect or obtain such qualification,
individually or in the aggregate, would not constitute a Parent Material Adverse
Effect. "PARENT MATERIAL ADVERSE EFFECT" means, with respect to Parent, any
adverse change, circumstance or effect that is reasonably likely to be
materially adverse to the business, financial condition or results of operations
of Parent and its Subsidiaries taken as a whole or on the transactions
contemplated hereby, other than any change, circumstance or effect (i) relating
to the economy or securities markets in general, or (ii) relating to the
industries in which Parent and its Subsidiaries operate
17
and not specifically relating to Parent and its Subsidiaries. The copies of the
certificate of incorporation and bylaws of Parent, which were previously
furnished to the Company, are complete copies of such documents as in effect on
the date of this Agreement.
(b) Authority; No Conflicts.
-----------------------
(i) Parent has all requisite corporate power and authority to
enter into this Agreement and to consummate the Transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation
of the Transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Parent. This Agreement has been
duly executed and delivered by Parent and constitutes a valid and binding
agreement of Parent, enforceable against it in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws relating to or affecting
creditors generally, by general equity principles (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
(ii) The execution and delivery of this Agreement does not or
will not, as the case may be, and the consummation of the Merger and the
other Transactions contemplated hereby will not, conflict with, or result
in a Violation pursuant to: (A) any provision of the certificate of
incorporation or bylaws of Parent or any Subsidiary of Parent, (B) except
as would not, individually or in the aggregate, constitute a Parent
Material Adverse Effect and, subject to obtaining or making the consents,
approvals, orders, authorizations, registrations, declarations and filings
referred to in paragraph (iii) below, any loan or credit agreement, note,
mortgage, bond, indenture, lease, benefit plan or other agreement,
obligation, instrument, permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to
Parent or any Subsidiary of Parent or their respective properties or
assets.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is
required by or with respect to Parent or any Subsidiary of Parent in
connection with the execution and delivery of this Agreement by Parent or
the consummation of the Merger and the other Transactions contemplated
hereby, except for the Required Consents and such consents, approvals,
orders, authorizations, registrations, declarations and filings the failure
of which to make or obtain would not, individually or in the aggregate,
constitute a Parent Material Adverse Effect.
(c) Information Supplied.
--------------------
(i) None of the information supplied or to be supplied by Parent
for inclusion or incorporation by reference in (A) the Offer Documents or
the Schedule 14D-9, including any amendments or supplements thereto, will,
at the respective times the Offer Documents and the Schedule 14D-9 are
filed with the SEC or first published or given to the Company's
stockholders contain any untrue statement of material fact, or
18
omit to state any material fact required to be stated herein or necessary
in order to make the statements therein in light of the circumstances under
which they were made not false or misleading, and (B) if required, the
Proxy Statement will, on the date it is first mailed to Company
stockholders or at the time of the Company Stockholders Meeting, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(ii) Notwithstanding the foregoing provisions of this Section
3.2(c), no representation or warranty is made by Parent with respect to
statements made or incorporated by reference in the Offer Documents, the
Schedule 14D-9, or the Proxy Statement, if required, based on information
supplied by the Company for inclusion or incorporation by reference
therein.
(d) Board Approval. The Board of Directors of Parent, by resolutions
--------------
duly adopted at a meeting duly called and held and not subsequently rescinded or
modified in any way, has duly and unanimously (i) determined that this Agreement
and the Merger are fair to and in the best interests of Parent and its
stockholders and (ii) approved this Agreement and the Merger.
(e) Brokers or Finders. No agent, broker, investment banker,
------------------
financial advisor or other firm or Person is or will be entitled to any broker's
or finder's fee or any other similar commission or fee in connection with any of
the Transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Parent, except ▇.▇. ▇▇▇▇▇▇ & Company and ▇▇▇▇ & Company, whose
fees and expenses will be paid by Parent in accordance with Parent's agreement
with such firm based upon arrangements made by or on behalf of Parent and
previously disclosed to the Company.
3.3 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB. Parent
-------------------------------------------------------
and Merger Sub represent and warrant to the Company as follows:
(a) Organization and Corporate Power. Merger Sub is a corporation
--------------------------------
duly incorporated, validly existing and in good standing under the laws of
Delaware. Merger Sub is a direct wholly owned subsidiary of Parent. The copies
of the certificate of incorporation and bylaws of Merger Sub, which were
previously furnished to the Company, are complete copies of such documents as in
effect on the date of this Agreement.
(b) Corporate Authorization. Merger Sub has all requisite corporate
-----------------------
power and authority to enter into this Agreement and to consummate the
Transactions contemplated hereby. The execution, delivery and performance by
Merger Sub of this Agreement and the consummation by Merger Sub of the
Transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Merger Sub. This Agreement has been duly
executed and delivered by Merger Sub and constitutes a valid and binding
agreement of Merger Sub, enforceable against it in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws
19
relating to or affecting creditors generally, by general equity principles
(regardless or whether such enforceability is considered in a proceeding in
equity or at law) or by an implied covenant of good faith and fair dealing.
(c) No Conflicts. The execution, delivery and performance by Merger
------------
Sub of this Agreement and the consummation by Merger Sub of the Transactions
contemplated hereby do not and will not contravene or conflict with the
certificate of incorporation or bylaws of Merger Sub.
(d) No Business Activities. Merger Sub has not conducted any
----------------------
activities other than in connection with the organization of Merger Sub, the
negotiation and execution of this Agreement and the consummation of the
Transactions contemplated hereby. Merger Sub has no Subsidiaries.
(e) Sufficient Funds. Either Parent or Merger Sub has sufficient
----------------
funds available to purchase all of the Shares outstanding on a fully diluted
basis pursuant to the Offer, to perform their respective obligations under this
Agreement including, without limitation, making the loans and/or contributions
to the Company as set forth in Section 1.1(d), 5.9 and 5.10 hereof and to pay
all fees and expenses related to the Transactions contemplated by this Agreement
to be paid by them.
(f) Share Ownership. Except as contemplated by the Stock Tender
---------------
Agreement, none of Parent, Merger Sub or any of their respective "affiliates" or
"associates" (as those terms are defined in Rule 12b-2 under the Exchange Act)
beneficially owns any Shares.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 COVENANTS OF THE COMPANY. During the period from the date of
------------------------
this Agreement and continuing until the Effective Time, the Company agrees as to
itself and its Subsidiaries that (except as expressly contemplated or permitted
by this Agreement or as otherwise indicated on the Company Disclosure Schedule
or as required by a Governmental Entity or to the extent that Parent shall
otherwise consent in writing, such consent not to be unreasonably withheld):
(a) Ordinary Course. The Company and its Subsidiaries shall carry on
---------------
their respective businesses in the usual, regular and ordinary course in all
material respects, in substantially the same manner as heretofore conducted, and
shall use all reasonable efforts to preserve intact their present lines of
business and keep available the services of their current officers and employees
and preserve their relationships with customers, suppliers, licensors,
licensees, distributors and others having business dealings with them; provided,
--------
however, that no action by the Company or its Subsidiaries covered by any other
-------
provision of this Section 4.1
20
shall be deemed a breach of this Section 4.1(a) unless such action would also
constitute a breach of one or more of such other provisions.
(b) Dividends; Changes in Share Capital. The Company shall not, and
-----------------------------------
shall not permit any of its Subsidiaries to, (i) declare or pay any dividends on
or make other distributions (whether in stock, cash or property) in respect of
any of its capital stock, except dividends by a wholly owned direct or indirect
Subsidiary of the Company to such Subsidiary's parent, (ii) split, combine or
reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for, shares of its capital stock, except for any such transaction by a wholly
owned Subsidiary of the Company which remains a wholly owned Subsidiary after
consummation of such transaction, or (iii) repurchase, redeem or otherwise
acquire any shares of its capital stock or any securities convertible into or
exercisable for any shares of its capital stock except to the extent required by
the Employment Agreements.
(c) Issuance of Securities. The Company shall not, and shall not
----------------------
permit any of its Subsidiaries to, issue, deliver, sell, pledge or otherwise
encumber (except for Permitted Liens described in clauses (i) and (ii) of the
definition thereof), any shares of its capital stock or authorize or propose the
issuance, delivery, sale, pledge or encumbrance (except for Permitted Liens
described in clauses (i) and (ii) of the definition thereof), of, any shares of
its capital stock of any class, any Company Voting Debt or any securities
convertible into or exercisable for, or any rights, warrants or options to
acquire, any such shares or Company Voting Debt, or enter into any agreement
with respect to any of the foregoing, other than (i) the issuance of Company
Common Stock upon the exercise of Company Stock Options outstanding on the date
hereof in accordance with their present terms or upon the exercise of the
Warrants, or (ii) issuances by a wholly owned Subsidiary of the Company of
capital stock to such Subsidiary's parent.
(d) Governing Documents. Except to the extent required to comply with
-------------------
their respective obligations hereunder, required by law or required by the rules
and regulations of the NASDAQ, the Company and its wholly owned Subsidiaries
shall not amend their respective certificates of incorporation, bylaws or other
governing documents.
(e) Acquisitions and Divestitures. The Company shall not, and shall
-----------------------------
not permit any of its Subsidiaries to, acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other manner, any business or
any corporation, partnership, association or other business organization or
division thereof or otherwise acquire or agree to acquire any assets (other than
the acquisition of assets used in the operations of the business of the Company
and its Subsidiaries in the ordinary course); provided, however, that the
foregoing shall not prohibit (x) internal reorganizations or consolidations
involving existing wholly owned Subsidiaries of the Company or (y) the creation
of new Subsidiaries of the Company organized to conduct or continue activities
otherwise permitted by this Agreement that in the case of clause (x) and (y)
would not otherwise be prohibited by or result in a breach of any other
provision of this Section 4.1. Other than (i) internal reorganizations or
consolidations involving existing wholly owned
21
Subsidiaries of the Company and (ii) as may be required by or in conformance
with law or regulation in order to permit or facilitate the consummation of the
Transactions contemplated hereby, the Company shall not, and shall not permit
any wholly owned Subsidiary of the Company to, sell, lease, encumber or
otherwise dispose of, or agree to sell, lease, encumber or otherwise dispose of,
any of its assets (including capital stock of wholly owned Subsidiaries of the
Company) which are material, individually or in the aggregate, to the Company
other than sales of inventory in the ordinary course of business.
(f) Indebtedness. The Company shall not, and shall not permit any of
------------
its wholly owned Subsidiaries to, (i) create, assume or incur any Indebtedness
or issue any debt securities, warrants or other rights to acquire any debt
securities of the Company or any of its Subsidiaries, other than Indebtedness
incurred under the Credit Agreement or other Indebtedness in an aggregate amount
not to exceed $500,000, (ii) except in the ordinary course of business
consistent with past practice, make any loans, advances or capital contributions
to, or investments in, any other Person, other than by the Company or a wholly
owned Subsidiary of the Company to or in the Company or any wholly owned
Subsidiary of the Company or (iii) except in the ordinary course of business
consistent with past practice, pay, discharge or satisfy any claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise); provided however, that the Company may refinance Indebtedness under
--------
the Credit Agreement.
(g) Compensation. Other than in accordance with the provisions of
------------
this Agreement, the Company shall not, and shall not permit any of its
Subsidiaries to, unless required by law or to maintain the tax qualification of
any Company Benefit Plan, to (i) increase any employee benefits provided to, or,
except in the ordinary course of business consistent with past practices,
increase the compensation or fringe benefits payable to, any employee or former
employee of the Company or any Subsidiary of the Company; (ii) adopt, enter
into, terminate or amend in any material respect any employment contract,
collective bargaining agreement or Company Benefit Plan; (iii) pay any benefit
not provided for under any Company Benefit Plan or any other benefit plan or
arrangement of the Company and its Subsidiaries; or (iv) increase in any manner
the severance or termination pay of any officer or employee.
(h) Accounting Methods; Income Tax Elections. Except as disclosed in
----------------------------------------
Company SEC Reports filed before the date of this Agreement, or as required by a
Governmental Entity, the Company shall not change its methods of accounting in
effect at December 31, 1997, except as required by changes in GAAP as concurred
in by the Company's independent auditors. The Company shall not (i) change its
fiscal year or (ii) make any material tax election, other than in the ordinary
course of business consistent with past practice, without consultation with
Parent.
(i) Material Agreements. The Company shall not, and shall not permit
-------------------
any of its Subsidiaries to, enter into any agreement of a nature that would be
required to be filed as an exhibit to Form 10-K under the Exchange Act, other
than contracts for the sale of the Company's or its Subsidiaries' products in
the ordinary course of business.
22
(j) Representations and Warranties. The Company shall not knowingly
------------------------------
take, and shall not permit any of its Subsidiaries knowingly to take, any
actions that would make any representation or warranty of the Company contained
in this Agreement untrue or incorrect in any material respect as of the date
when made or as of the Closing Date.
(k) Agreements or Commitments. The Company shall not, and shall not
-------------------------
permit any of its Subsidiaries to, authorize any of, or commit or agree to take
any of, the foregoing actions.
4.2 ADVICE OF CHANGES; GOVERNMENTAL FILINGS. Each party shall (a)
---------------------------------------
confer on a regular and frequent basis with the other and (b) report (to the
extent permitted by law or regulation or any applicable confidentiality
agreement) on operational matters. The Company and Parent shall file all
reports required to be filed by each of them with the SEC (and all other
Governmental Entities) between the date of this Agreement and the Effective Time
and shall (to the extent permitted by law or regulation or any applicable
confidentiality agreement) deliver to the other party copies of all such
reports, announcements and publications promptly after the same are filed.
Subject to applicable laws relating to the exchange of information, each of the
Company and Parent shall have the right to review in advance, and will consult
with the other with respect to, all the information relating to the other party
and each of their respective wholly owned Subsidiaries, which appears in any
filings, announcements or publications made with, or written materials submitted
to, any third party or any Governmental Entity in connection with the
Transactions contemplated by this Agreement. In exercising the foregoing right,
each of the parties hereto agrees to act reasonably and as promptly as
practicable. Each party agrees that, to the extent practicable and as timely as
practicable, it will consult with, and provide all appropriate and necessary
assistance to, the other party with respect to the obtaining of all permits,
consents, approvals and authorizations of all third parties and Governmental
Entities necessary or advisable to consummate the Transactions contemplated by
this Agreement and each party will keep the other party apprised of the status
of matters relating to completion of the Transactions contemplated hereby.
4.3 CONTROL OF THE COMPANY'S BUSINESS. Nothing contained in this
---------------------------------
Agreement shall give Parent, directly or indirectly, the right to control or
direct the Company's operations before the consummation of the Offer. Before
the consummation of the Offer, each of the Company and Parent shall exercise,
consistent with the terms and conditions of this Agreement, complete control and
supervision over its respective operations.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 STOCKHOLDERS MEETING; PREPARATION OF PROXY STATEMENT. If
----------------------------------------------------
required by applicable law in order to consummate the Merger, the Company
(acting through its Board of Directors in the case of clauses (a) and (b))
shall, as soon as practicable following the
23
consummation of the Offer in accordance with applicable law, its certificate of
incorporation and its bylaws:
(a) duly call, give notice of, convene and hold a special meeting of
its stockholders as soon as practicable following the consummation of the Offer
for the purpose of considering and taking action upon this Agreement (the
"COMPANY STOCKHOLDERS MEETING").
(b) subject to its fiduciary duties under applicable law, include in
the proxy statement or information statement prepared by the Company for
distribution to stockholders of the Company in advance of the Company
Stockholders Meeting in accordance with Regulation 14A or Regulation 14C
promulgated under the Exchange Act (the "PROXY STATEMENT") so much of the
recommendation of its Board of Directors referred to in Section 1.2(a) hereof as
is relevant to the Merger; and
(c) (i) prepare and file a preliminary and definitive Proxy Statement
with the SEC, (ii) use its best efforts to, after consultation with Parent,
respond promptly to any comments made by the SEC with respect to the Proxy
Statement and any preliminary version thereof and cause the Proxy Statement to
be mailed to its stockholders following the consummation of the Offer and (iii)
take all actions necessary to obtain the necessary approvals of this Agreement
by its stockholders.
(d) if there shall occur any event that should be set forth in an
amendment or supplement to the Proxy Statement, promptly prepare and mail to its
stockholders such an amendment or supplement.
Parent will provide the Company with the information concerning Parent and
Merger Sub required to be included in the Proxy Statement and will vote, or
cause to be voted, all Shares owned by it or its Subsidiaries in favor of
approval and adoption of this Agreement.
5.2 ACCESS TO INFORMATION.
---------------------
(a) Upon reasonable notice, the Company shall (and shall cause its
Subsidiaries to) (i) afford to the officers, employees, accountants, counsel,
financial advisors and other representatives of Parent reasonable access during
normal business hours, during the period before the consummation of the Offer,
to all its officers, key employees, properties, books, contracts, commitments
and records and, during such period, the Company shall (and shall cause its
Subsidiaries to) furnish promptly to Parent, consistent with its legal
obligations, all information concerning its business, properties and personnel
as Parent may reasonably request and (ii) make available to Parent a copy of
each report, schedule, registration statement and other document filed or
received by it during such period pursuant to the requirements of the federal or
state securities laws or the federal tax laws and all other information
concerning its business, properties and personnel as Parent may reasonably
request; provided, however, that the Company may restrict the foregoing access
to the extent that (i) a Governmental Entity requires the Company or any of its
Subsidiaries to restrict access to any properties or information reasonably
related to any such contract on the basis of applicable laws and
24
regulations with respect to national security matters or (ii) any law, treaty,
rule or regulation of any Governmental Entity applicable to the Company requires
the Company or its Subsidiaries to restrict access to any properties or
information.
(b) The parties will hold any such information that is nonpublic in
confidence to the extent required by, and in accordance with, the provisions of
the letter dated April 6, 1998 between the Company and Parent (the
"CONFIDENTIALITY AGREEMENT").
5.3 BEST EFFORTS.
------------
(a) Subject to the terms and conditions of this Agreement, each party
will use its reasonable best efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate the Offer, the Merger and the
other Transactions contemplated by this Agreement as soon as practicable after
the date hereof. In furtherance and not in limitation of the foregoing, each
party hereto agrees to make, to the extent it has not already done so, an
appropriate filing of a Notification and Report Form pursuant to the HSR Act
with respect to the Transactions contemplated hereby as promptly as practicable
and to supply as promptly as practicable any additional information and
documentary material that may be requested pursuant to the HSR Act and to take
all other actions necessary to cause the expiration or termination of the
applicable waiting periods under the HSR Act as soon as practicable.
(b) Each of the Company and Parent shall, in connection with the
efforts referenced in Section 5.3(a) to obtain all requisite approvals and
authorizations for the Transactions contemplated by this Merger Agreement under
the HSR Act or any other Regulatory Law (as defined below), use its reasonable
best efforts to (i) cooperate in all respects with each other in connection with
any filing or submission and in connection with any investigation or other
inquiry, including any proceeding initiated by a private party, (ii) promptly
inform the other party of any communication received by such party from, or
given by such party to, the Antitrust Division of the Department of Justice (the
"DOJ") or any other Governmental Entity and of any material communication
received or given in connection with any proceeding by a private party, in each
case regarding any of the Transactions contemplated hereby, and (iii) permit the
other party to review any communication given by it to, and consult with each
other in advance of any meeting or conference with, the DOJ or any such other
Governmental Entity or, in connection with any proceeding by a private party,
with any other Person, and to the extent permitted by the DOJ or such other
applicable Governmental Entity or other Person, give the other party the
opportunity to attend and participate in such meetings and conferences. For
purposes of this Agreement, "REGULATORY LAW" means the ▇▇▇▇▇▇▇ Act, as amended,
the ▇▇▇▇▇▇▇ Act, as amended, the HSR Act, the Federal Trade Commission Act, as
amended, and all other federal, state and foreign, if any, statutes, rules,
regulations, orders, decrees, administrative and judicial doctrines and other
laws that are designed or intended to prohibit, restrict or regulate actions
having the purpose or effect of monopolization or restraint of trade or
lessening of competition through merger or acquisition.
25
(c) In furtherance and not in limitation of the covenants of the
parties contained in Sections 5.3(a) and 5.3(b), if any administrative or
judicial action or proceeding, including any proceeding by a private party, is
instituted (or threatened to be instituted) challenging any transaction
contemplated by this Agreement as violative of any Regulatory Law, each of the
Company and Parent shall cooperate in all respects with each other and use its
respective reasonable best efforts to contest and resist any such action or
proceeding and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order, whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents or restricts
consummation of the Transactions contemplated by this Agreement.
Notwithstanding the foregoing or any other provision of this Agreement, nothing
in this Section 5.3 shall limit a party's right to terminate this Agreement
pursuant to Section 7.1(b)(ii) so long as such party has complied in all
material respects with its obligations under this Section 5.3.
5.4 ACQUISITION PROPOSALS. The Company agrees that neither it nor
---------------------
any of its Subsidiaries shall, and that it shall direct and use its reasonable
best efforts to cause its and its Subsidiaries' directors, officers, employees,
agents and representatives (including any investment banker, attorney or
accountant retained by it or any of its Subsidiaries) not to, directly or
indirectly, initiate, solicit, encourage or knowingly facilitate (including by
way of furnishing information) any inquiries or the making of any proposal or
offer with respect to a merger, reorganization, share exchange, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving, or any purchase or sale of all or any significant portion
of the assets of, it or any of its Subsidiaries or any purchase or sale of more
than 25% of the equity securities of the Company or any equity securities of any
Significant Subsidiary (as that term is defined in Rule 405 under the Securities
Act) (any such proposal or offer whether or not in writing or in sufficient
detail to be accepted and whether or not conditional (other than a proposal or
offer made by Parent or an affiliate thereof) being hereinafter referred to as
an "ACQUISITION PROPOSAL"). The Company further agrees that neither it nor any
of its Subsidiaries shall, and that it shall direct and use its best efforts to
cause its and its Subsidiaries' directors, officers, employees, agents and
representatives (including any investment banker, attorney or accountant
retained by it or any of its Subsidiaries) not to, directly or indirectly, have
any discussion with or provide any confidential information or data to any
Person relating to an Acquisition Proposal, or engage in any negotiations
concerning an Acquisition Proposal, or knowingly facilitate any effort or
attempt to make or implement an Acquisition Proposal or accept an Acquisition
Proposal. Notwithstanding the foregoing, the Company or its Board of Directors
shall be permitted, at any time prior to the acceptance for payment of the
Shares pursuant to the Offer, to (A) engage in discussions or negotiations with,
or provide information to, any Person in response to an unsolicited Acquisition
Proposal by such Person if (x) the Board of Directors of the Company concludes
in good faith that such Acquisition Proposal constitutes or could reasonably be
expected to lead to a Superior Proposal and (y), before providing any
information to such Person, the Board of Directors receives from such Person an
executed confidentiality agreement containing confidentiality provisions
substantially similar to those contained in the Confidentiality Agreement; and
(B) if the Board of Directors concludes in good faith that such Acquisition
Proposal constitutes a Superior Proposal (i) recommend approval of such Superior
Proposal, (ii) in response to such Superior Proposal, withdraw or modify in an
adverse manner the Company Board Approval, or (iii) enter into an agreement in
principle or
26
a definitive agreement with respect to such Superior Proposal, provided,
--------
however, that, in the case of either (A) or (B) the Board of Directors of the
-------
Company determines in good faith after consultation with outside counsel that it
should take such action consistent with its fiduciary duties under applicable
law. In the event the Company shall determine to provide any information as
described above, or shall receive any Acquisition Proposal, it shall promptly
inform Parent as to the fact that information is to be provided or that an
Acquisition Proposal has been received and shall furnish to Parent a description
of the material terms thereof. As used in this Agreement, "SUPERIOR PROPOSAL"
means a bona fide Acquisition Proposal which the Company Board of Directors
concludes in good faith (after consultation with its financial advisors and
legal counsel), taking into account all legal, financial, regulatory and other
aspects of the proposal and the Person making the proposal, provides for a
transaction that, taking into account its likelihood of completion, is more
favorable to the Company's stockholders (in their capacities as stockholders),
than the Transactions contemplated by this Agreement.
5.5 EMPLOYEE BENEFITS.
-----------------
(a) Employment Agreements. Parent has reviewed and is familiar with
---------------------
the terms and provisions of the employment agreements set forth on Schedule
5.5(a) (the "EMPLOYMENT AGREEMENTS") and understands and agrees that such
Employment Agreements are in full force and effect and constitute valid and
binding agreements of the Company and/or its Subsidiaries. Parent acknowledges
that the transactions contemplated by this Agreement will constitute a change of
control under such Employment Agreements and that, upon such change of control,
and upon any termination of employment of any employee covered by such
Employment Agreements following such change of control, the pertinent employee
will be entitled to the payments due under the relevant Employment Agreement to
such employee upon a change of control, in the first case, and to the payments
due thereunder upon a termination following a change of control, in the second
case. Parent will cause the Company to comply with and make the payments due
under the Employment Agreements.
(b) Severance Agreements. Parent has reviewed and is familiar with
--------------------
the terms and provisions of the severance plan described on Schedule 5.5(b).
Parent acknowledges that the transactions contemplated by this Agreement will
constitute a "transaction change" for purposes of such severance plan and that,
in consequence, the severance provisions there set forth will be applicable
following the consummation of the Offer.
(c) Benefit Plans. Until December 31, 1999, Parent agrees that it
-------------
shall, or it shall cause the Company and the Surviving Corporation to, maintain
employee benefit plans, policies or arrangements (other than stock-based plans
or stock-based provisions in plans) for the benefit of employees of the Company
and its Subsidiaries (other than those employees who are employed pursuant to a
collective bargaining agreement or who are members of a collective bargaining
unit or labor union) which are substantially comparable in the aggregate to the
employee benefit plans, policies or arrangements of the Company in effect on the
date hereof (other than stock-based plans or stock-based provisions in the
plans) set forth on Schedule 5.5(c).
27
(d) Benefit Plan Eligibility. Parent agrees that it shall, or it
------------------------
shall cause the Company and the Surviving Corporation to, give employees of the
Company and/or any of its Subsidiaries full credit for service for purposes of
eligibility, vesting and satisfaction of waiting periods under any employee
benefit plans, policies or arrangements maintained by the Company, Parent or the
Surviving Corporation in which such employees are entitled to participate.
Employees of the Company and/or any of its Subsidiaries shall not be subject to
any pre-existing condition exclusions or limitations under Parent's or the
Surviving Corporation's benefit plans (except to the extent that such exclusions
presently apply to an employee under the Company's and/or any of such
Subsidiaries' benefit plans).
5.6 FEES AND EXPENSES. Whether or not the Offer is consummated, all
-----------------
Expenses incurred in connection with this Agreement and the Transactions
contemplated hereby shall be paid by the party incurring such Expenses, except
(a) if the Merger is consummated, the Surviving Corporation shall pay, or cause
to be paid, any and all property or transfer taxes imposed on the Company or its
Subsidiaries, (b) Expenses incurred in connection with the filing, printing and
mailing of the Offer Documents, Schedule 14D-9 and, if required, the Proxy
Statement, which shall be shared equally by Parent and the Company (c) amounts
loaned or contributed by Parent to the Company pursuant to Section 1.1(d) or
5.10 shall be repaid by the Company or the Surviving Corporation, as the case
may be, on commercially reasonable terms and (d) as provided in Section 7.2. As
used in this Agreement, "EXPENSES" includes all out-of-pocket expenses
(including all fees and expenses of counsel, accountants, investment bankers,
experts and consultants to a party hereto and its affiliates) incurred by a
party or on its behalf in connection with or related to the authorization,
preparation, negotiation, execution and performance of this Agreement and the
Transactions contemplated hereby, including the preparation, printing, filing
and mailing of the Offer Documents, Schedule 14D-9, the Proxy Statement, if
required, and the solicitation of stockholder approvals, if required, and all
other matters related to the Transactions contemplated hereby.
5.7 DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE.
------------------------------------------------------
(a) Until the expiration of all applicable statutes of limitations,
from and after the consummation of the Offer, the Company shall and Parent shall
cause the Company (or any successor to the Company) to, and from and after the
Effective Time, Parent and Surviving Corporation shall, indemnify, defend and
hold harmless the present and former officers and directors of the Company and
its Subsidiaries (each an "INDEMNIFIED PARTY") against all losses, claims,
damages, liabilities, fees, penalties and expenses (including reasonable fees
and disbursements of counsel and judgments, fines, losses, claims, liabilities
and amounts paid in settlement arising out of actions or omissions occurring at
or before the consummation of the Offer) (including losses incurred in
connection with such person's serving as a trustee or other fiduciary in any
entity if such service was at the request or for the benefit of the Company or
any of its subsidiaries) to the full extent permitted by the DGCL, such right to
include the right to advancement of expenses incurred in the defense of any
action or suit promptly after statements therefor are received to the fullest
extent permitted by law; provided that the Indemnified Party to whom expenses
are advanced provides an undertaking to repay such advance if it is ultimately
determined that such party is not entitled to indemnification.
28
Notwithstanding the foregoing, an Indemnifying Party shall not be liable for any
settlement of any claim effected without such Indemnifying Party's written
consent, which consent shall not be unreasonably withheld. Parent will
cooperate in the defense of any such matter.
(b) Parent or the Surviving Corporation shall maintain the Company's
existing directors' and officers' liability insurance on behalf of the
Indemnified Parties, including any such insurance maintained on behalf of any
such Indemnified Party serving as a director or officer of any Subsidiary of the
Company, including coverage with respect to claims arising from facts or events
which occurred at or before the consummation of the Offer ("D&O INSURANCE") for
a period of not less than six years after the consummation of the Offer;
provided, however, that Parent may substitute therefor policies of substantially
similar coverage with a face amount not less that the existing D&O Insurance and
containing terms no less favorable to such Indemnified Parties; provided,
further, if the existing D&O Insurance expires, is terminated or cancelled
during such period, Parent or the Surviving Corporation will obtain
substantially similar D&O Insurance.
(c) The certificate of incorporation and the bylaws of the Company
and, after the Effective Time, the Surviving Corporation shall contain the
provisions with respect to advancement of expenses, indemnification and
exculpation from liability set forth in the certificate of incorporation and
bylaws of the Company on the date of this Agreement, which provisions shall not
for a period of ten years following the Effective Time be amended, repealed or
otherwise modified in any manner that would adversely affect the rights
thereunder of individuals who on or before the consummation of the Offer were
entitled to advances, indemnification or exculpation thereunder, including any
individuals serving as directors or officers of any Subsidiary of the Company at
the Company's request, it being acknowledged by the parties hereto that each
director or officer of the Company that is currently serving as a director or
officer of a Subsidiary of the Company is doing so at the request of the
Company.
(d) In the event Parent or the Surviving Corporation or any of their
respective successors or assigns (i) consolidates with or merges into any other
Person and shall not be the continuing or surviving corporation or entity in
such consolidation or merger or (ii) transfers all of substantially all its
properties and assets to any Person, then, and in each case, proper provision
shall be made so that the successors and assigns of Parent or the Surviving
Corporation, as the case may be, honor the indemnification obligations set forth
in this Section 5.7.
(e) The obligations of the Company, Parent and the Surviving
Corporation under this Section 5.7 shall not be terminated, modified or assigned
in such a manner as to materially adversely affect any Indemnified Party without
the consent of such Indemnified Party (it being expressly agreed that the
Indemnified Parties shall be third-party beneficiaries of this Section 5.7).
5.8 PUBLIC ANNOUNCEMENTS. The Company and Parent shall use all
--------------------
reasonable efforts to develop a joint communications plan, and each party shall
use all reasonable efforts (i) to ensure that all press releases and other
public statements with respect to the Transactions
29
contemplated hereby shall be consistent with such joint communications plan, and
(ii) unless otherwise required by applicable law or by obligations pursuant to
any listing agreement with or rules of any securities exchange, to consult with
each other before issuing any press release or otherwise making any public
statement with respect to this Agreement or the Transactions contemplated
hereby.
5.9 SENIOR NOTES. In accordance with the terms of the Indenture,
------------
dated as of August 1, 1993 (the "INDENTURE"), between the Company, as issuer,
and First Trust National Association, as trustee (the "TRUSTEE"), with respect
to the 10 1/2% Senior Notes due 2003 (the "SENIOR NOTES"), within five days
following the acquisition by Parent or Merger Sub of beneficial ownership,
directly or indirectly, of more than 50% of the Common Stock, the Company shall,
in accordance with the Indenture, notify the Trustee and, the Company or the
Surviving Corporation, as the case may be, within 20 business days prior to the
Final Change of Control Put Date (as defined in the Indenture), give written
notice to each holder of the Senior Notes, stating, among other things, (i) that
a Change of Control (as defined in the Indenture) has occurred, (ii) that each
holder of the Senior Notes has the right to require the Company to repurchase
such holder's Senior Notes at a purchase price in cash in an amount equal to
101% of the principal amount of such Senior Notes, plus accrued and unpaid
interest thereon, if any, to the purchase date thereof and (iii) the date on
which such Senior Notes shall be purchased which shall be a business day no
later than 40 business days after the occurrence of or Change of Control.
Parent shall lend or contribute to the Company an amount in cash necessary to
repurchase all such Senior Notes.
5.10 CREDIT AGREEMENT. The Company shall use its best efforts to
----------------
obtain all necessary waivers and consents prior to the consummation of the Offer
so that the transactions contemplated hereby will not result in or constitute a
default under that certain Credit Agreement dated as of August 4, 1993, as
amended, by and among the Company, Lenders, Bank of America NT & SA, as Co-Agent
for Lenders and The Bank of Nova Scotia, as the Agent for Lenders (the "CREDIT
AGREEMENT"). In the event that (i) such waiver and consent is not obtained,
(ii) the transactions contemplated hereby result in a default and the Lenders
under the Credit Agreement accelerate the payment of outstanding indebtedness
thereunder, and (iii) the Company, after using its best efforts, is unable to
refinance or repay such indebtedness, then, following the consummation of the
Offer, Parent agrees to make a loan to the Company in an amount sufficient for
the Company to repay the outstanding Indebtedness and any other obligations
under the Credit Agreement, or, if such amount cannot be borrowed by the Company
for any reason, to contribute such amount to the Company.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
----------------------------------------------------------
obligations of the Company, Parent and Merger Sub to effect the Merger are
subject to the satisfaction or waiver on or before the Closing Date of the
following conditions:
30
(a) No Injunctions or Restraints, Illegality. No Laws shall have been
----------------------------------------
adopted or promulgated, and no temporary restraining order, preliminary or
permanent injunction or other order issued by a court or other Governmental
Entity of competent jurisdiction shall be in effect, having the effect of making
the Merger illegal or otherwise prohibiting consummation of the Merger;
provided, however, that the provisions of this Section 6.1(a) shall not be
available to any party whose failure to fulfill its obligations pursuant to
Section 5.3 shall have been the cause of, or shall have resulted in, such order
or injunction.
(b) HSR Act. The waiting period (and any extension thereof)
-------
applicable to the Merger under the HSR Act shall have been terminated or shall
have expired.
(c) Purchase of Shares. Parent, Merger Sub or their affiliates shall
------------------
have purchased Shares of Company Common Stock pursuant to the Offer.
(d) Company Stockholder Approval. If required by applicable law, the
----------------------------
Company shall have obtained the Required Company Vote in connection with the
adoption of this Agreement by the stockholders of the Company.
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER SUB.
-------------------------------------------------------------
The obligations of Parent and Merger Sub to effect the Merger are subject to the
satisfaction, or waiver by Parent, on or before the Closing Date, of the
following conditions:
(a) Representations and Warranties. Each of the representations and
------------------------------
warranties of the Company set forth in this Agreement shall be true and correct
on the Closing Date as though made on and as of the Closing Date, or in the case
of representations and warranties made as of a specified date earlier than the
Closing Date, on and as of such earlier date, except to the extent that failure
to be true and correct does not constitute a Company Material Adverse Effect,
and Parent shall have received a certificate of the Company, executed on its
behalf by its chief executive officer and chief financial officer to such
effect.
(b) Performance of Obligations of the Company. The Company shall have
-----------------------------------------
performed or complied in all material respects with all agreements and covenants
required to be performed by it under this Agreement at or before the Closing
Date, and Parent shall have received a certificate of the Company, executed on
its behalf by its chief executive officer and chief financial officer to such
effect.
The conditions set forth in Section 6.2 hereof shall cease to be conditions to
the obligations of the parties if Merger Sub shall have accepted for payment and
paid for Shares validly tendered pursuant to the Offer.
6.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY. The
---------------------------------------------------
obligations of the Company to effect the Merger are subject to the satisfaction,
or waiver by the Company, on or before the Closing Date, of the following
additional conditions:
31
(a) Representations and Warranties. Each of the representations and
------------------------------
warranties of Parent and Merger Sub set forth in this Agreement shall be true
and correct on the Closing Date as though made on and as of the Closing Date, or
in the case of representations and warranties made as of a specified date
earlier than the Closing Date, on and as of such earlier date, except to the
extent that failure to be true and correct does not constitute a Parent Material
Adverse Effect, and the Company shall have received a certificate of Parent,
executed on its behalf by its chief executive officer and chief financial
officer to such effect.
(b) Performance of Obligations of Parent. Parent shall have performed
------------------------------------
or complied in all material respects with all agreements and covenants required
to be performed by it under this Agreement at or before the Closing Date, and
the Company shall have received a certificate of Parent, executed on its behalf
by its chief executive officer and chief financial officer to such effect.
The conditions set forth in Section 6.3 hereof shall cease to be conditions to
the obligations of the parties if Merger Sub shall have accepted for payment and
paid for Shares validly tendered pursuant to the Offer.
ARTICLE VII
TERMINATION
7.1 TERMINATION. This Agreement may be terminated at any time before
-----------
the Effective Time, by action taken or authorized by the Board of Directors of
the terminating party or parties, and except as provided below, whether before
or after approval of the matters presented in connection with the Merger by the
stockholders of the Company:
(a) By mutual written consent of Parent and the Company, by action of
their respective Boards of Directors;
(b) By either of the Company, on the one hand, or Parent and Merger
Sub, on the other hand:
(i) if shares of Company Common Stock shall not have been
purchased pursuant to the Offer on or before the Extension Date; or
(ii) if any Governmental Entity shall have issued an order,
decree or ruling or taken any other action (which order, decree, ruling or
other action the parties hereto shall use their respective reasonable best
efforts to lift), in each case permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement, and
such order, decree, ruling or other action shall have become final and
nonappealable; or
32
(iii) if, due to the occurrence of one of the events set forth
on Annex A hereto (other than the event set forth in clause (g) thereof),
-------
Parent, Merger Sub or any of their affiliates shall have failed to commence
the Offer on or before five business days following the date of the initial
public announcement of the Offer; or
(iv) if, due to a failure of any of the conditions set forth in
Annex A hereto to be satisfied, the Offer is terminated or expires in
-------
accordance with its terms and the terms of this Agreement without Parent or
Merger Sub, as the case may be, purchasing any shares of Company Common
Stock thereunder.
(c) By the Company:
(i) if, before the purchase of shares of Company Common Stock
pursuant to the Offer, the Board of Directors either shall (A) have entered
into an Agreement with respect to a Superior Proposal pursuant to clause
(B)(iii) of Section 5.4, (B) have recommended a Superior Proposal, or (C)
have withdrawn or modified in an adverse manner to Parent or Merger Sub its
approval or recommendation of the Offer, this Agreement or the Merger (or
the Board of Directors resolves to do any of the foregoing); or
(ii) if Parent or Merger Sub shall have terminated the Offer, or
the Offer shall have expired in accordance with its terms and the terms of
this Agreement, without Parent or Merger Sub, as the case may be,
purchasing any shares of Company Common Stock pursuant thereto.
(d) By Parent and Merger Sub:
(i) if, before the purchase of shares of Company Common Stock
pursuant to the Offer, the Board of Directors of the Company shall (A) have
recommended an Acquisition Proposal, (B) have withdrawn or modified in a
manner adverse to Parent or Merger Sub its approval or recommendation of
the Offer, this Agreement or the Merger or (C) have executed an agreement
in principle or definitive agreement relating to an Acquisition Proposal or
similar business combination with a Person other than Parent, Merger Sub or
their affiliates (or the Board of Directors of the Company resolves to do
any of the foregoing).
Notwithstanding anything else contained in this Agreement, the right to
terminate this Agreement under this Section 7.1 shall not be available to any
party (a) that is in material breach of its obligations hereunder or (b) whose
failure to fulfill its obligations or to comply with its covenants under this
Agreement has been the cause of, or resulted in, the failure to satisfy any
condition to the obligations of either party hereunder.
33
7.2 EFFECT OF TERMINATION.
---------------------
(a) In the event of termination of this Agreement by either the
Company or Parent as provided in Section 7.1, this Agreement shall forthwith
become void and there shall be no liability or obligation on the part of Parent,
Merger Sub or the Company or their respective officers or directors except with
respect to Section 3.1(h), Section 3.2(e), Section 5.2(b), Section 5.6, this
Section 7.2 and Article VIII. Nothing in this Section 7.2 shall relieve any
party hereto for breach of any covenant or other agreement in this Agreement
before termination.
(b) Parent and the Company agree that (i) if the Company shall
terminate this Agreement pursuant to Section 7.1(c)(i), or if Parent shall
terminate this Agreement pursuant to Section 7.1(d)(i), or (ii) this Agreement
is terminated for any other reason (other than the breach of this Agreement by
Parent or Merger Sub and other than pursuant to Section 7.1(a)) and, in the case
of this clause (ii) only, (x) at the time of such termination there was pending
an Acquisition Proposal from a third party and (y) the transactions contemplated
by such Acquisition Proposal with such third party are consummated with such
third party within one year after such termination, then the Company shall pay
to Parent an amount equal to $28 million (the "COMPANY TERMINATION FEE").
(c) Any payment required to be made pursuant to Section 7.2(b) shall
be made to Parent not later than three Business Days after the termination of
this Agreement or in the case of Section 7.2(b)(ii), three Business Days after
the consummation of, an Acquisition Proposal, as applicable. All payments under
this Section 7.2 shall be made by wire transfer of immediately available funds
to an account designated by the party entitled to receive payment.
ARTICLE VIII
GENERAL PROVISIONS
8.1 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. None
---------------------------------------------------------
of the representations, warranties, covenants and other agreements in this
Agreement or in any instrument delivered pursuant to this Agreement, including
any rights arising out of any breach of such representations, warranties,
covenants and other agreements, shall survive the consummation of the Offer,
except for (x) those representations, warranties and covenants which are
conditions to the Merger, which, for purposes of Section 6, shall survive until
the Effective time, (y) those covenants and agreements contained herein and
therein that by their terms apply or are to be performed in whole or in part
after the consummation of the Offer and (z) this Article VIII.
8.2 NOTICES. All notices and other communications hereunder shall be
-------
in writing and shall be deemed duly given (a) on the date of delivery if
delivered personally, or by telecopy or telefacsimile, upon confirmation of
receipt, (b) on the first Business Day following the date of dispatch if
delivered by a recognized next-day courier service or (c) on the tenth
34
Business Day following the date of mailing if delivered by registered or
certified mail, return receipt requested, postage prepaid. All notices
hereunder shall be delivered as set forth below, or pursuant to such other
instructions as may be designated in writing by the party to receive such
notice:
(a) if to the Company to:
Triangle Pacific Corp.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
with a copy to:
O'Melveny & ▇▇▇▇▇ LLP
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
(b) if to Parent or Merger Sub, to:
▇▇▇▇▇▇▇▇▇ World Industries, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇., Esq.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
35
8.3 INTERPRETATION. When a reference is made in this Agreement to
--------------
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents, glossary and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include", "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation". The words "hereof", "herein" and "herewith" and words of
similar import shall, unless otherwise stated, be construed to refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
article, section, paragraph, exhibit and schedule references are to the
articles, sections, paragraphs, exhibits and schedules of this Agreement unless
otherwise specified. The words describing the singular number shall include the
plural and vice versa, and words denoting any gender shall include all genders
and words denoting natural persons shall include corporations and partnerships
and vice versa. The phrase "made available" in this Agreement shall mean that
the information referred to has been made available if requested by the party to
who such information is to be made available. As used in this Agreement, the
term "affiliate(s)" shall have the meaning set forth in Rule 12b-2 of the
Exchange Act. The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
8.4 COUNTERPARTS. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that both
parties need not sign the same counterpart.
8.5 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES.
----------------------------------------------
(a) This Agreement and the Confidentiality Agreement constitute the
entire agreement and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof,
other than the Confidentiality Agreement, which shall survive the execution and
delivery of this Agreement.
(b) This Agreement shall be binding upon and inure solely to the
benefit of each party hereto, and nothing in this Agreement, express or implied,
is intended to or shall confer upon any other Person any right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement, other than
Sections 5.5(a) and 5.7 (which are intended to be for the benefit of the Persons
covered thereby and may be enforced by such Persons).
8.6 GOVERNING LAW. This Agreement shall be governed and construed in
-------------
accordance with the laws of the State of Delaware.
8.7 SEVERABILITY. If any term or other provision of this Agreement
------------
is invalid, illegal or incapable of being enforced by any law or public policy,
all other terms and provisions
36
of this Agreement shall nevertheless remain in full force and effect so long as
the economic or legal substance of the Transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the Transactions contemplated
hereby are consummated as originally contemplated to the greatest extent
possible.
8.8 ASSIGNMENT. Neither this Agreement nor any of the rights,
----------
interests or obligations hereunder shall be assigned by any of the parties
hereto, in whole or in part (whether by operation of law or otherwise), without
the prior written consent of the other party, and any attempt to make any such
assignment without such consent shall be null and void. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit of
and be enforceable by the parties and their respective successors and assigns.
8.9 SUBMISSION TO JURISDICTION; WAIVERS. Each of the Company and
-----------------------------------
Parent irrevocably agrees that any legal action or proceeding with respect to
this Agreement or for recognition and enforcement of any judgment in respect
hereof brought by the other party hereto or its successors or assigns may be
brought and determined in the Chancery or other Courts of the State of Delaware,
and each of the Company and Parent hereby irrevocably submits with regard to any
such action or proceeding for itself and in respect to its property, generally
and unconditionally, to the nonexclusive jurisdiction of the aforesaid courts.
Each of the Company and Parent hereby irrevocably waives, and agrees not to
assert, by way of motion, as a defense, counterclaim or otherwise, in any action
or proceeding with respect to this Agreement, (a) the defense of sovereign
immunity, (b) any claim that it is not personally subject to the jurisdiction of
the above-named courts for any reason other than the failure to serve process in
accordance with this Section 8.9, (c) that it or its property is exempt or
immune from jurisdiction of any such court or from any legal process commenced
in such courts (whether through service of notice, attachment before judgment,
attachment in aid of execution of judgment, execution of judgment or otherwise)
and (d) to the fullest extent permitted by applicable law, that (i) the suit,
action or proceeding in any such court is brought in an inconvenient forum, (ii)
the venue of such suit, action or proceeding is improper and (iii) this
Agreement, or the subject matter hereof, may not be enforced in or by such
courts.
8.10 ENFORCEMENT. The parties agree that irreparable damage would
-----------
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms. It is accordingly agreed
that the parties shall be entitled to specific performance of the terms hereof,
this being in addition to any other remedy to which they are entitled at law or
in equity.
8.11 AMENDMENT. This Agreement may be amended by the parties hereto,
---------
by action taken or authorized by their respective Boards of Directors, at any
time before or after approval of the matters presented in connection with the
Merger by the stockholders of the Company and Parent, but, after any such
approval, no amendment shall be made which by law or in accordance with the
rules of any relevant stock exchange requires further approval by such
37
stockholders without such further approval; and provided, however, that after
-------- -------
the approval of this Agreement by the shareholders of the Company, no such
amendment, modification or supplement shall reduce or change the Merger
Consideration or adversely affect the rights of the Company's shareholders
hereunder without the approval of such shareholders. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
8.12 EXTENSION; WAIVER. At any time before the Effective Time, the
-----------------
parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party. The failure
of any party to this Agreement to assert any of its rights under this Agreement
or otherwise shall not constitute a waiver of those rights.
8.13 DEFINITIONS. As used in this Agreement:
-----------
(a) "DATE HEREOF" means June 12, 1998.
(b) "BOARD OF DIRECTORS" means the Board of Directors of any specified
Person and any committees thereof.
(c) "BUSINESS DAY" means any day on which banks are not required or
authorized to close in the City of New York.
(d) "INDEBTEDNESS" of any person means all obligations of such person
(i) for borrowed money, (ii) evidenced by notes, bonds, debentures or similar
instruments, (iii) for the deferred purchase price of goods or services (other
than trade payables or accruals incurred in the ordinary course of business),
(iv) under capital leases and (v) in the nature of guarantees of the obligations
described in clauses (i) through (iv) above of any other person.
(e) "THE OTHER PARTY" means, with respect to the Company, Parent and
Merger Sub and means, with respect to Parent, the Company.
(f) "PERSON" means an individual, corporation, limited liability
company, partnership, association, trust, unincorporated organization, other
entity or group (as defined in the Exchange Act).
(g) "PERMITTED LIEN" means any Lien that:
(i) is a lien of a landlord, carrier, warehouseman, mechanic, materialman,
or any other statutory lien arising in the ordinary course of business;
38
(ii) is a lien for Taxes not yet due or being contested in good faith;
(iii) with respect to the right of Seller to use any property leased to
Seller, arises by the terms of the applicable lease;
(iv) is a purchase money security interest arising in the ordinary course
of business;
(v) is a lien granted prior to the date hereof pursuant to the Credit
Agreement; or
(vi) does not materially detract from the value of the encumbered property
or assets or materially detract from or interfere with the use of the
encumbered property or assets in the ordinary course of business.
(h) "STOCK TENDER AGREEMENT" means that certain stock tender agreement
dated as of the date hereof by and between Parent or Merger Sub and the other
parties thereto.
(j) "SUBSIDIARY" when used with respect to any party means any
corporation or other organization, whether incorporated or unincorporated, (i)
of which such party or any other Subsidiary of such party is a general partner
(excluding partnerships, the general partnership interests of which held by such
party or any Subsidiary of such party do not have a majority of the voting
interests in such partnership) or (ii) at least a majority of the securities or
other interests of which having by their terms ordinary voting power to elect a
majority of the Board of Directors or others performing similar functions with
respect to such corporation or other organization is directly or indirectly
owned or controlled by such party or by any one or more of its Subsidiaries, or
by such party and one or more of its Subsidiaries.
8.14 OTHER AGREEMENTS. The parties hereto acknowledge and agree that,
----------------
except as otherwise expressly set forth in this Agreement, the rights and
obligations of the Company and Parent under any other agreement between the
parties shall not be affected by any provision of this Agreement.
39
IN WITNESS WHEREOF, Parent, the Company and Merger Sub have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first above written.
TRIANGLE PACIFIC CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Title: Chairman of the Board
and Chief Executive Officer
---------------------------------
▇▇▇▇▇▇▇▇▇ WORLD INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Title: Chairman of the Board, President
and Chief Executive Officer
---------------------------------
SAPLING ACQUISITION, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Title: President and Chairman of the
Board of Directors
---------------------------------
S-1
ANNEX A
-------
CONDITIONS TO THE OFFER
-----------------------
Notwithstanding any other provision of the Offer, subject to the
provisions of the Merger Agreement, Merger Sub shall not be required to accept
for payment or, subject to any applicable rules and regulations of the SEC,
including Rule 14e-1(c) under the Exchange Act (relating to Merger Sub's
obligation to pay for or return tendered Shares promptly after termination or
withdrawal of the Offer), pay for, and may delay the acceptance for payment of
or, subject to the restriction referred to above, the payment for, any tendered
Shares, and may not accept for payment any tendered Shares if (i) any applicable
waiting period under the HSR Act has not expired or been terminated prior to the
expiration of the Offer, (ii) the Minimum Condition has not been satisfied or
(iii) at any time on or after June 12, 1998, and before the time of acceptance
of Shares for payment pursuant to the Offer, any of the following events shall
occur:
(a) there shall have been any statute, rule, regulation, judgment,
decision, action, order or injunction promulgated, entered, enforced, enacted or
issued applicable to the Offer or the Merger by any federal or state
governmental regulatory or administrative agency or authority or court or
legislative body or commission that (1) prohibits the consummation of the Offer
or the Merger, (2) prohibits Parent's or Merger Sub's ownership or operation of
all or a majority of the Company's businesses or assets, or imposes any material
limitations on Parent's or Merger Sub's ownership or operation of all or a
majority of the Company's businesses or assets or constitutes a Company Material
Adverse Effect or a Parent Material Adverse Effect, (3) imposes material
limitations on the ability of Parent or Merger Sub to acquire or hold, or
exercise full rights of ownership of, any Shares to be accepted for payment
pursuant to the Offer including, without limitation, the right to vote such
Shares on all matters properly presented to the stockholders of the Company, or
any federal or state governmental regulatory or administrative agency or
authority shall have commenced or threatened to commence litigation or another
proceeding intended to achieve the results set forth in clauses (1)-(3) above;
provided, that the parties shall have used their reasonable best efforts to
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cause any such statute, rule, regulation, judgment, order or injunction to be
vacated or lifted;
(b) (i) the representations and warranties of the Company set forth in
the Merger Agreement (without giving effect in any such representation or
warranty to any materiality or Company Material Adverse Effect standard,
qualification or exception contained therein) shall not be true and accurate as
of the date of the Merger Agreement and at the scheduled or extended expiration
of the Offer (except for those representations and warranties that address
matters only as of a particular date or only with respect to a specific period
of time which need only be true and accurate as of such date or with respect to
such period), except where the failure of such representations or warranties to
be true and accurate, individually or in the aggregate, does not constitute a
Company Material Adverse Effect, or (ii) the Company shall have breached or
failed to perform or comply in any material respect with any covenant required
by the Merger Agreement to be performed or complied with by it except, in the
case
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of covenants set forth in Sections 4.1(a) and (j), where the failure to perform
or comply with such covenants does not constitute a Company Material Adverse
Effect.
(c) the Merger Agreement shall have been terminated in accordance with
its terms;
(d) it shall have been publicly disclosed that any Person, entity or
"group" (as defined in Section 13(d)(3) of the Exchange Act) shall have acquired
beneficial ownership (as determined pursuant to Rule 13d-3 promulgated under the
Exchange Act) of more than a majority of the then-outstanding Shares, through
the acquisition of stock, the formation of a group or otherwise;
(e) the Board of Directors of the Company shall or any Committee
thereof have withdrawn or modified in a manner adverse to Parent or Merger Sub
its approval or recommendation of the Offer or the Merger or the adoption of the
Agreement or recommended an Acquisition Proposal other than the one contemplated
by the Merger Agreement, or shall have executed an agreement in principle a
definitive agreement relating to such an Acquisition Proposal or similar
business combination with a Person or entity other than Parent, Merger Sub or
their affiliates, or the Board of Directors of the Company shall have adopted a
resolution to do the foregoing; or
(f) there shall have occurred and be continuing (i) any general
suspension of trading in securities on any national securities exchange or in
the over-the-counter market, (ii) the declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States (whether or not
mandatory) or (iii) any limitation (whether or not mandatory) by an United
States governmental authority or agency on the extension of credit by banks or
other financial institutions which in the reasonable judgment of Parent or
Merger Sub, in any such case, makes it inadvisable to proceed with the Offer or
with such acceptance for payment or payments;
(g) all consents, registrations, approvals, permits, authorizations,
notices, reports or other filings required to be obtained or made by the
Company, Parent or Merger Sub with or from any Governmental Entity in connection
with the execution, delivery and performance of the Merger Agreement, the Offer
and the consummation of the transactions contemplated by the Merger Agreement
shall not have been made or obtained and such failure could reasonably be
expected to have a Company Material Adverse Effect; or
(h) any change shall have occurred since the date of the Merger
Agreement that individually or in the aggregate constitutes a Company Material
Adverse Effect.
The foregoing conditions are for the sole benefit of Merger Sub and
Parent and, subject to the terms of the Merger Agreement, may be asserted by
either of them or may be waived by Parent or Merger Sub, in whole or in part at
any time and from time to time in the sole discretion of Parent or Merger Sub.
The failure by Parent or Merger Sub at any time to
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exercise any such rights shall not be deemed a waiver of any right and each
right shall be deemed an ongoing right that may be asserted at any time and from
time to time.
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